Oil and gas explorer Serica Energy has finally completed its cash and shares acquisition of an 18% stake in the UK North Sea’s Erskine field.
It is nearly a year since the London company first announced the deal, which is estimated to be worth about £8.7million.
Chairman Tony Craven Walker said the protracted transaction underlined the need for greater co-operation within the industry to open up shared access to key infrastructure.
Under terms announced last June, Serica agreed to stump up £6.5million and 27million shares for BP’s stake in Erskine.
But BP has paid back around £5.9million and received 13.5million shares after adjustments caused by the time lapse since the deal’s “effective date” of January 1, 2014.
The sale needed the consent of other partners in Erskine, as well as the Department of Energy and Climate Change.
It makes Serica a co-owner of the gas and condensate field alongside operator Chevron, with 50%, and BG Group (32%).
It also boosts Serica’s plans to export gas from its nearby Columbus field through the Lomond platform, which is Erskine’s export route.
Serica has been considering a range of options for gas export from Columbus after BG Group rejected plans to connect the discovery to its Lomond installation, while another plan to use a direct subsea tie-back to Lomond also faltered.
But the firm sees “significant room for improved productivity” on Erskine, which lies about 150 miles east of Aberdeen and has been shown to be capable of producing up to 4,000 barrels of oil equivalent (boe) per day net to Serica.
Erskine gas is delivered from Lomond via the Central Area Transmission System to a terminal on Teesside, with up to 60% of it purchased by SSE and the balance sold to BP.
Condensate separated at the Lomond platform is delivered via the Forties pipeline to Cruden Bay and then sold to BP.
Serica said Erskine’s output was badly hit by “poor infrastructure performance downstream” last year, and the field was shut down altogether from September to late May due to work on the Lomond platform.
But the major overhaul of Lomond’s processing capability is expected to “enhance efficiencies” on Erskine.
Mr Walker said: “It is the intention of all field participants to continue to seek ways of improving production performance. If we are successful in this endeavour, it will bring significant benefits for Serica shareholders.”
Serica’s chairman said the legal complexities of successfully pulling off its deal with BP, which now has a 5% stake in Serica as a result, highlighted the challenges facing smaller operators.
“It should not have taken a year to complete,” he said, adding there were too many barriers in the way of “smaller companies coming into the North Sea to take over mature fields”.
Mr Walker said he was encouraged by a commitment from the Oil and Gas Authority – the industry’s new regulator – to look at commercial agreements, with a view to opening up access to infrastructure.
Serica said its “tax efficient” Erskine acquisition gave it around 3.3million boe of producing, proven and probable reserves at a cost of about $4 a barrel.
