Completion of Magnus Transaction
As outlined in the announcement on 7 September 2018, the addition of Magnus is expected to add:
- approximately 60 MMboe of 2P reserves (equating to approximately 30 per cent. of the Group’s reserve base) as at 1 January 2018;
- approximately 10 MMboe of 2C resources (equating to approximately 6 per cent. of the Group’s resource base) as at 1 January 2018; and
- approximately $500 million of net present value to the Group at $70/bbl long-term oil price, as outlined in the Competent Person’s Report on Magnus included in the Prospectus dated 7 September 2018
With an effective economic date of 1 January 2017, it is estimated that the net amount financed by BP and to be repaid out of the future cash flows from the 75% interest in Magnus is around $100 million (subject to customary completion adjustments). EnQuest has also paid its $100 million cash contribution of the consideration from the funds received through the Rights Issue undertaken in October.
EnQuest CEO, Amjad Bseisu, said:
“We are delighted to have completed the acquisition of Magnus, the Sullom Voe Terminal and associated infrastructure from BP. These assets are a strong strategic fit for EnQuest to which we can apply our life extension expertise and deliver value for all our stakeholders.
“The addition of Magnus is expected to add material production and cash flow from the addition of significant low-cost 2P reserves. These cash flows will help facilitate the planned reductions in the Group’s debt. We continue to assess further value accretive, short-cycle opportunities that have been identified at Magnus.
“SVT is an essential element of our North Sea portfolio through which we flow over one-third of our North Sea production. We are on track to deliver around £50 million of cost savings in our first year as operator, and plan further savings in 2019 while exploring opportunities for new business to maximise the terminals value.”
EnQuest now has a 100.0% equity stake in Magnus, 15.1% in SVT, 18.0% in the Ninian Pipeline System and 41.9% in the Northern Leg Gas Pipeline.
This acquisition and the associated details of the transaction were announced on 7 September 2018.
For further information please contact:
EnQuest PLC Tel: +44 (0)20 7925 4900
Amjad Bseisu (Chief Executive)
Jonathan Swinney (Chief Financial Officer)
Ian Wood (Communications & Investor Relations)
Tulchan Communications Tel: +44 (0)20 7353 4200
Notes to editors
EnQuest is one of the largest UK independent producers in the UK North Sea. EnQuest PLC trades on both the London Stock Exchange and the NASDAQ OMX Stockholm. Its operated assets include Thistle/Deveron, Heather/ Broom, the Dons area, Magnus, the Greater Kittiwake Area, Scolty/Crathes Alma/Galia and Kraken; EnQuest also has an interest in the non-operated Alba producing oil field. At the end of June 2018, EnQuest had interests in 20 UK production licences and was the operator of 18 of these licences.
EnQuest believes that the UKCS represents a significant hydrocarbon basin, which continues to benefit from an extensive installed infrastructure base and skilled labour. EnQuest believes that its assets offer material organic growth opportunities, driven by exploitation of current infrastructure on the UKCS and the development of low risk near field opportunities.
EnQuest is replicating its model in the UKCS by targeting previously underdeveloped assets in a small number of other maturing regions; complementing its operations and utilising its deep skills in the UK North Sea. In which context, EnQuest has interests in Malaysia where its operated assets include the PM8/Seligi Production Sharing Contract and the Tanjong Baram Risk Services Contract.
Forward-looking statements: This announcement may contain certain forward-looking statements with respect to EnQuest’s expectation and plans, strategy, management’s objectives, future performance, production, reserves, costs, revenues and other trend information. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that may occur in the future. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. The statements have been made with reference to forecast price changes, economic conditions and the current regulatory environment. Nothing in this announcement should be construed as a profit forecast. Past share performance cannot be relied on as a guide to future performance.