Verus has agreed to acquire Cieco Exploration & Production (UK) from parent ITOCHU Corporation for USD400 million. The effective date of the transaction is 1 January 2018.
The acquisition will includes a 23.1% interest in the Western Isles Development Project, a 25.8% interest in the Hudson field, a 2.0% interest in the Brent Pipeline System, and a 1.2% interest in the Sullom Voe terminal. This will add 11mboepd taking Verus' net production to c.18mboepd
The transaction will be funded by a combination of equity, existing cash reserves and debt. Equity will be provided by HitecVision, the majority owner of Verus.
Alan Curran, Chief Executive of Verus Petroleum commented:
"Verus is pleased to have signed this SPA with ITOCHU, which is aligned with our strategy to expand our production base and cash flow through the acquisition of high quality production assets. We are delighted to acquire high value barrels with the Western Isles production in particular having very low lifting costs and being a long-life asset with strong cash generation...
The Western Isles development includes the Harris and Barra oil fields. Production has exceeded expectations since it started in November 2017 and is currently on plateau at in excess of 40,000 boepd, with an estimated field life of 15 years.
HitecVision’s continued support provides Verus with a solid capital base which is a robust foundation for further growth."
Western Isles
The Western Isles project comprises the Harris and Barra fields, located south of Hudson. The two fields have been developed as subsea tie-backs to a new build cylindrical FPSO. First production was originally envisaged to be in 2015, but delays to the construction of the FPSO topsides meant production was not achieved until November 2017.
Verus has therefore acquired the Western Isles post first oil with a few months of production history. The field is Dana Petroleum's (76.9%) first fully operated full development and therefore a landmark project for Dana.
The field is estimated to contain c.50mmbbl oil and c.2bcf gas, peaking at 40mbopd production. Produced gas will be used for fuel until the field becomes gas deficient at which time it will look to import gas.
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| Western Isles cylindrical FPSO |
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