Tulip Oil Sells Dutch Assets for $263mn

Dutch producer Tulip Oil has agreed to sell a package of gas assets in the Netherlands' offshore zone to London-listed investment group Kistos for a minimum of €220mn ($263mn), the companies reported on March 12.

Tulip will transfer its wholly-owned subsidiary Tulip Oil Netherlands, which controls 60% operating interests in the producing Q-10A gas field and the Q-10B, Q-11B and M10/M11 discoveries, as well as the Donkerborek Main, Donkerborek West and Akkrum 11 licences. The company drastically reduced production at Q-10A last year in response to the steep decline in European gas prices, which have since rebounded on the back of cold winter weather.

Kistos will settle the €220mn headline payment using cash, a new debt instrument and some of its equity, as well as by assuming and refinancing existing bonds issued by Tulip. It may also pay up to €163mn in contingent payments depending on development goals being met, as well as €5mn in warrants.

Q10-A has 19.5mn barrels of oil equivalent in proven and probable reserves and Tulip netted 5,470 boe/day of production from the field last year. The field relies on solar and wind power for its energy needs, meaning that CO₂ emissions from production are less than 10g CO₂ equivalent/boe versus a 21 kg/boe North Sea average.

"We are very excited to be beginning the next phase of Kistos' journey with the acquisition of these profitable and cash generative assets, which have probably the lowest carbon footprint of any production assets in the North Sea," Kistos chairman Andrew Austin said in a statement. "To be producing gas, a vital transition fuel, from normally unmanned platforms powered by solar and wind is exactly what we set out to do."

Kistos said the acquisition would establish it as one of the lowest CO₂/boe Scope 1 emitters in northwest Europe, noting that the assets offered potential for significant production increases. The assets earned €30.6mn in Ebitda last year, and their gas was sold at an average price of €11.58/MWh.

Tulip has "built a strong portfolio of producing, development and exploration assets and has an excellent reputation for exploration successes and on-time and on-budget project delivery," the company's chairman Leo Koot commented.

It is a challenging time for the Dutch gas industry. Operators are still waiting for an incentives package to be introduced to support investment, and draconian rules onshore nitrogen deposition have brought project permitting to a standstill. These factors, as well as volatile prices, have created a "perfect storm," the Netherlands Oil and Gas Exploration and Production Association (Nogepa) told NGW last year.

Austin was CEO of UK Rockrose Energy until it was bought by Viaro last July.