Neo Closes North Sea Asset Deal with Total

Neo Energy has closed the acquisition of a group of UK North Sea oil and gas fields from France's Total, Neo's Norwegian owner, private equity firm HitecVision, said on August 3.

Total agreed in July last year to sell the assets to Neo and Oman's Petrogas for $635mn, but Petrogas pulled out of the deal in May, citing market volatility. Terms were revised, although neither Neo and Total have disclosed what changes were made. The collapse in oil and gas prices triggered by the Covid-19 pandemic has led to drastic cuts to the price tags of many deals agreed before the crisis.

"The expeditious completion of this transaction is a major milestone for Neo Energy as we build a next generation North Sea operator," Neo's interim CEO Paul Harris commented. "I am extremely excited by the quality of both the asset portfolio and the group of over 60 outstanding professionals we have assembled."

Neo has taken Total's 100% stakes in the Dumbarton, Balloch, Lochranza and Drumtochty fields, its stakes of over 60% in the Affleck, Flyndre and Cawdor fields, along with 31% of GoldenEagle, 5.2% of Scott and 2.4% of Telford. It has also gained operatorship over all the fields save for GoldenEagle, Scott and Telford, which are operated by China's Cnooc.

The deal nets Neo 23,000 barrels of oil equivalent/day of oil and gas production, along with around 51mn boe of reserves.

Most majors have been scaling back their operations in recent years, and the pandemic has prompted them to fast-track divestment plans in order to bolster their cash reserves. Total agreed to sell the 180,000 b/d Lindsey oil refinery in northeast England in late July to local firm Prax Group, and is reportedly seeking to sell its interest in the Seal gas pipeline in the UK North Sea as well.