Elaine Maslin
Independent oil and gas firm EnQuest is to take over control of the North Sea Kraken discovery after agreeing to up its stake to 45%.
Today’s deal, with Nautical Petroleum, will see EnQuest buy 25% in the heavy oil field east of Shetland in return for carrying £96million to £154million of Nautical’s development costs.
It also includes an agreement to farm into Nautical’s Keto discovery and gains EnQuest stakes in two other Nautical-held blocks.
The move follow’s EnQuest purchase of a 20% stake in the field from Canamens just two weeks ago as part of a near-£60million deal and leaves Nautical with a 25% interest with First Oil of Aberdeen holding the remaining 30%.
EnQuest’s chief executive Amjad Bseisu said: “EnQuest is very pleased to be able to increase its interest in Kraken and to become the future operator of the proposed development.
“With EnQuest’s integrated project development capabilities, our execution team will take the project forward and lead the development, subject to approval of the field development plan.
“With Nautical’s background and deep expertise in this project, EnQuest is keen to combine forces and to jointly move forward what we believe to be one of the most exciting development projects in the UK North Sea.
“This latest transaction also gives us further potential upside from the surrounding exploration opportunities and an agreed farm-in to the Ketos discovery which we will jointly appraise with Nautical.”
London-based Nautical’s chief executive Steve Jenkins said the deal strengthened the joint venture, technically and financially, “significantly mitigating our funding requirements for the development of the field”.
He said the firm was carrying out concept selection and were in discussions with contractors to provide a leased floating production vessel.
Analysts at Numis said: “We see this as a positive for both EnQuest and Nautical with the Kraken field development now being pushed ahead by a well capitalised and resourced operator.
“Of particular interest, EnQuest has an option to earn a 45% farm-in interest in block 9/1a which contains the Ketos discovery in return for paying 90% of the cost of two appraisal wells. Ketos contains an estimated additional 34million barrels of oil of gross prospective resource.”
The amount EnQuest will carry on Nautical’s Kraken development costs will be determined by how much probable reserves are found in the field during development drilling.
Current estimated contingent reserves on the field are 160million barrels of oil.
Nautical said it expected a field development plan to get approval from the Department of Energy and Climate Change in the fourth quarter of this year with first oil in 2015.
Enquest was formed in 2010 from the demerged UK North Sea assets of Petrofac and Lundin Petroleum.
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