BP Sells UK Assets Package to Serica for $397mn
UK major BP has agreed to sell a package of its interests in the Bruce assets in the North Sea to UK minnow Serica Energy for an expected £300mn ($397mn), it said November 21. BP operates the mainly gas-producing assets, which comprise the Bruce, Keith and Rhum fields, three bridge-linked platforms and associated subsea infrastructure.
The typical average daily gross production is about 40-50,000 barrels of oil equivalent (boe).
For Serica, this deal – which will increase its output by about seven times to 22,000 boe/d and reserves by about 16 times to 50mn boe – the acquisition is a reverse takeover, funded without the need to raise equity. Its effective date is January 1, 2018, with completion expected in the middle of the year.
After the deal, BP will retain just 1% of Bruce, along with Serica (36%), Total (43.25%), BHP Billiton (16%) and Marubeni (3.75%). Serica will own all of BP’s share in Keith, alongside BHP Billiton (31.83%), Total (25%) and Marubeni (8.33%) and all of BP’s 50% share in Rhum, with Iranian Oil Co (part of state-owned NIOC) owning the other half.
Serica will pay BP an upfront payment of £12.8mn ($17mn), a share of cash flow over the next four years, a consideration equivalent to 30% of BP’s post-tax decommissioning costs and several contingent payments dependent on future asset performance and product prices. Overall, BP expects to receive payments of around £300mn, most of which will be received over the next four years.
BP upstream boss Bernard Looney said BP was continually refreshing its portfolio and focusing our activity on assets which will add most value over the long-term. It expects its North Sea production to double to around 200,000 boe/d by 2020 through new projects like Quad 204 and Clair Ridge. “While the Bruce assets are no longer core to BP, we are confident that Serica is the right owner and operator to maximise their continuing value for both companies and for the UK,” he said.
Serica chairman Tony Craven Walker commented: “This transaction will establish Serica as a leading British independent oil company with the scale, balance sheet and operating capability to prosper in the North Sea’s rapidly changing upstream oil and gas industry.”
The Bruce field was discovered in 1974 and came into production in 1993, with Keith tied back to Bruce in 2000. Rhum, a high-pressure, high-temperature satellite field 40 km north of Bruce, was brought into production in 2005.
The Bruce assets are expected to transition to Serica as a fully operational entity with around 110 staff who operate and support the assets expected to transfer with the business. Subject to the receipt of regulatory and other third-party approvals, BP aims to complete the sale and transfer of operatorship in 3Q 2018.
Serica also announced November 21 the appointment of a CEO, Mitch Flegg, who also worked on the deal. The company said that further appointments are planned to broaden and diversify representation on the board in line with the significantly increased scale and nature of the company's expanded operations and strategic potential for further growth. Serica bought BP's stake in the Erskine gas field in 2015.