EnQuest the new UK North Sea oil and gas operator formed in a demerger of assets by British energy service group Petrofac and Sweden’s Lundin Petroleum, unveiled its first acquisition yesterday.
It announced it was taking over Canadian oil and gas group Stratic Energy in an all-share deal.
EnQuest, which is targeting acquisitions to help to meet its aim of raising oil production by 10% a year in the medium term, said the £28.7million deal would increase its annual oil output by about 5%.
It also allows EnQuest to increase its interest in the West Don field, where Calgary-based Stratic owns a minority stake, to about 45%.
In addition, the move will see EnQuest gain an important foothold in the Crawford field in the North Sea.
Under the deal, EnQuest will refinance Stratic’s net debt of £46.9million.
EnQuest chief executive Amjad Bseisu said: “The position in Crawford was quite interesting for us because they do have proven and probable reserves and a development coming in the future.”
The acquisition will increase EnQuest’s proved and probable reserves in the UK North Sea by 7.27million barrels of oil equivalent, adding about 11% to its overall reserves.
EnQuest listed in April when the North Sea assets of Petrofac and Lundin were combined.
It is focused mainly on organic growth but is also looking at both corporate and asset acquisitions, according to Mr Bseisu.
He said: “We’ve said maybe one-third of our profile (increased oil production) would come from the acquisitions and two-thirds from organic growth.”
The deal is widely expected to complete within 10 weeks.
An analyst, who did not wish to be named, said he viewed it as no more than a housekeeping exercise.
He added: “Stratic is a fairly distressed junior partner in their West Don development, so EnQuest picking them up isn’t that surprising.
“They don’t have to worry about whether their partner can fund any ongoing activity there.”
EnQuest said it was looking at a handful of potential deals and the firm expects to complete additional acquisitions in the next 12-18 months.
Mr Bseisu said: “There’s quite a few things for sale, both packages from the majors . . . as well as some independents.
“There’s probably between half a dozen to 10 things on the market as we speak.”