Long awaited deal finally announced: NEO acquires ExxonMobil UK

NEO Energy and HitecVision have announced the signing of a transaction that puts NEO Energy among the top five oil and gas companies in the UK.

NEO Energy is acquiring a major portfolio of non-operated oil and gas assets in the Central and Northern North Sea from ExxonMobil. Following completion, NEO’s expected proforma 2021 production will be circa 70,000 barrels of oil equivalent per day (boepd), growing organically to more than 80,000 boepd in 2024 through ongoing field developments. NEO is acquiring a substantial, cash generative portfolio that will significantly increase and diversify its producing asset base. Adding close to 40,000 boepd and more than 140 million boe of reserves, it represents a major step towards NEO’s near-term target of producing 120,000 boepd.

The acquisition is an important milestone for NEO, supporting the company’s strategy of being a leading full-cycle E&P company on the UKCS. On completion of the transaction, NEO will have a strong presence in the key hubs in the Central and Northern North Sea, with total reserves and resources of around 300 million boe. The company will have a total of 35 fields both producing and under development.

The agreement is valued at more than USD 1 billion. There may be additional contingent considerations of approx. USD 300 million based on the potential for increases in commodity prices.

The assets include several organic growth opportunities, including ongoing development projects such as the Penguins field, infill wells and life extension opportunities. The total number of employees in NEO at closure of the transaction will be circa 160.

The fields being acquired are operated by some of the largest and most experienced offshore operators in the world including Shell, BP and Total. NEO will become Shell’s largest partner in the UK Central and Northern North Sea.

Russ Alton, CEO of NEO Energy, said:

'This acquisition builds on NEO’s existing North Sea portfolio and towards delivering on our ambition to be a leading producer on the UKCS. NEO is well placed, together with its operating partners, to extract value from this and other opportunities, while at the same time focusing on improved environmental performance.'

John Knight, Senior Partner at HitecVision, added:

'HitecVision is a leading investor in the European offshore energy industry with USD 6.7 billion in assets under management. We have built one of Norway’s largest oil and gas companies, through our joint venture with ENI, in Vår Energi. We believe that NEO has the potential to achieve a similar position in the UK sector to that held by Vår Energi in Norway. We will continue to fund NEO’s growth in the UK through more acquisitions and, where appropriate, mergers. This will be the first UK investment for our most recent fund, The  North Opportunity Fund, which we closed in March 2020.'

The transaction, which is subject to approvals from the relevant authorities and regulatory consents, is expected to complete by the middle of 2021.

The portfolio to be acquired consists of 21 assets, including 14 fields and a number of infrastructure positions. The fields can be divided into the following hubs:

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OGA launches full investigation into possible licence breach

The Oil and Gas Authority (OGA) has opened an investigation into a possible breach of reporting requirements under a licence. 

The investigation follows an Enquiry which concluded that there was sufficient evidence of a breach to go ahead.

The investigation will now among other things: 

• gather and assess further information to enable the OGA to reach a decision
• offer the company concerned the opportunity to provide written representations
• decide how the case should be resolved

The investigation follows the publication in October 2020 of the Thematic Review into Industry Compliance with Regulatory Obligations. 

The Review, which examined compliance in six areas of interaction between the OGA and licensees, identified some very good, and improving, practice, but also noted the need for further improvement and warned that sanctions could follow in cases where breaches were found. 

The Review itself followed a June 2019 OGA letter to licensees and infrastructure owners which outlined the OGA’s regulatory approach. While praising a great deal of constructive engagement, the letter noted that ‘too many issues [were] taking too long to resolve’ and warned that ‘we will be progressively more proactive in using the OGA’s powers’. 

Original article link: https://www.ogauthority.co.uk/news-publications/news/2021/oga-launches-full-investigation-into-possible-licence-breach/

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Partial electrification of Sleipner approved

The Ministry of Petroleum and Energy has approved a revised plan for development and operation (PDO) for partial electrification of the Sleipner field centre. The field centre will be tied to the Utsira High area solution, and Sleipner is expected to cut emissions by more than 150,000 tonnes of CO₂ per year.

“Partial electrification of the Sleipner field centre will contribute to major cuts in emissions from our activities and provide significant assignments for the supplier industry in a demanding time. As the authorities have approved the PDO, we can keep developing the Norwegian continental shelf (NCS) towards the goal of zero greenhouse gas emissions in 2050,” says Arne Sigve Nylund, executive vice president for Technology, Projects and Drilling in Equinor.

In June, Equinor and its partners Vår Energi, LOTOS and KUFPEC submitted a revised plan for development and operation (PDO) to the authorities. The investments are in the size of NOK 850 million. Sleipner is scheduled to be tied in to the Utsira High area solution by the end of 2022.

“Sleipner is an important field on the NCS contributing enormous value to Norwegian society. The partners have focused on being in the forefront of technology development and innovation to carry out for example carbon capture, injection and storage at the field. The decision to partly electrify the field helps the partners in their effort of further developing the field,” says Kjetil Hove, executive vice president for Development and Production Norway in Equinor.

Arne Sigve Nylund, executive vice president for Technology, Projects and Drilling in Equinor, and Kjetil Hove, executive vice president for Development and Production Norway in Equinor.

The Sleipner field centre solution involves laying a power cable from Sleipner to the Gina Krog platform, which will be tied to the power from shore Utsira High area solution.

The Utsira High area solution was originally planned for the four fields: Johan Sverdrup, Edvard Grieg, Ivar Aasen and Gina Krog. The Sleipner field centre and the Gudrun, Gina Krog, Utgard, Gungne and Sigyn tie-in fields will now receive power from shore through the area solution.

In June, Aibel was awarded the EPCIC contract (engineering, procurement, construction, installation and commissioning) for Sleipner modifications. The contract for production and laying of cables was awarded to the NKT cable supplier.

Worth around NOK 400 million, the EPCIC contract will require approximately 170 man-years distributed on two years at Aibel’s offices in Stavanger and at their yard in Haugesund. Purchase of equipment from sub-suppliers is expected to be in the size of NOK 150 million.

Sleipner licence partners: Equinor Energy AS (operator) 59.6%, Vår Energi AS 15.4%, LOTOS Exploration and Production Norge AS 15.0%, KUFPEC Norway AS 10.0%

Original article link: https://www.equinor.com/en/news/20210211-partial-sleipner-electrifiction-approved.html

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Equinor selected for largest-ever US offshore wind award

Equinor has been selected to provide New York State with offshore wind power in one of the largest renewable energy procurements in the U.S. to date.

Under the award, Equinor and incoming strategic partner BP will provide generation capacity of 1,260 megawatts (MW) renewable offshore wind power from Empire Wind 2, and another 1,230 MW of power from Beacon Wind 1 – adding to the existing commitment to provide New York with 816 MW of renewable power from Empire Wind 1 – totaling 3.3 gigawatts (GW) of power to the State. The execution of the procurement award is subject to the successful negotiation of a purchase and sale agreement, which the partnership looks forward to finalizing together with the New York State Energy Research and Development Authority (NYSERDA).

As part of the award by NYSERDA, the companies will partner with the State to transform two venerable New York ports – the South Brooklyn Marine Terminal (SBMT) and the Port of Albany – into large-scale offshore wind working industrial facilities that position New York to become an offshore wind industry hub.

“These projects will deliver homegrown, renewable electricity to New York and play a major role in the State’s ambitions of becoming a global offshore wind hub. The U.S. East Coast is one of the most attractive growth markets for offshore wind in the world. The successful bids for Empire Wind 2 and Beacon Wind 1 represent a game-changer for our offshore wind business in the U.S. and underline Equinor’s commitment to be a leading company in the energy transition. These projects will also create value through economies of scale and support our strategic ambition of becoming a global offshore wind major,” says Anders Opedal, CEO of Equinor.

“Together, Equinor and the State of New York will create a robust offshore wind supply chain capable of manufacturing, assembling, and staging these projects at scale. As Equinor works to expand its renewable energy presence across the United States and the globe, New York’s leadership clearly illustrates the transformative benefits of offshore wind on climate goals and economic activity alike. We are looking forward to developing Empire Wind and Beacon Wind together with local authorities, communities and our incoming partner bp in growing this new industry,” says Siri Espedal Kindem, President of Equinor Wind U.S.

Taken together, these offshore wind projects will help the State’s economic rebound and strengthen disadvantaged communities while helping the State achieve its nation-leading renewable energy goals.

ABOUT SOUTH BROOKLYN MARINE TERMINAL (SBMT)

Equinor will invest in port upgrades to help transform SBMT into a world-class offshore wind staging and assembling facility and become the operations and maintenance (O&M) base both for Equinor and other project developers going forward.

SBMT will be one of the largest dedicated offshore wind port facilities in the United States at approximately 73 acres, with the capacity to accommodate wind turbine generator staging and assembly activities at the scale required by component manufacturers.

ABOUT PORT OF ALBANY

Equinor will combine forces with established wind industry companies Marmen and Welcon at the Port of Albany to help the port become America’s first offshore wind tower and transition piece manufacturing facility, where it will produce components for Equinor’s projects.

The site, located in the State’s Capital Region, stands to become a go-to destination for future projects to source offshore wind towers, transition pieces, and other manufacturing components for many years to come as offshore wind continues to grow along the East Coast.

ABOUT THE ASSETS

Empire Wind is located 15-30 miles southeast of Long Island and spans 80,000 acres, with water depths of between 65 and 131 feet. The lease was acquired in 2017 and is being developed in two phases (Empire Wind 1 and 2) with a total installed capacity of more than 2 GW (816 + 1,260 MW).

Beacon Wind is located more than 60 miles east of Montauk Point and 20 miles south of Nantucket and covers 128,000 acres. The lease was acquired in 2019 and has the potential to be developed with a total capacity of more than 2.4 GW. This first phase will have an installed capacity of 1,230 MW.

In September 2020, Equinor and bp announced that they formed a strategic partnership for offshore wind in the U.S., and that bp will be a 50 percent partner in the Equinor-operated Empire Wind and Beacon Wind assets on the U.S. East coast. The transaction is expected to close in early 2021.

ABOUT EQUINOR

Equinor is developing into a broad energy company, building a material position in renewable energy. Equinor now powers more than one million European homes with renewable offshore wind from four projects in the United Kingdom and Germany. Equinor commissioned the world’s first floating offshore wind farm in 2017 off the coast of Scotland. In the U.S., Equinor holds two lease areas, the Empire Wind lease area located approximately 20 miles south of Long Island, and the Beacon Wind lease area that lies 60 miles off the coast of Long Island.

Original article link: Equinor selected for largest-ever US offshore wind award

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Noreco: Tyra redevelopment project delayed from 2022 into Q2 2023

Norwegian Energy Company ASA (“Noreco” or “the Company”) announces today the following update on the Tyra Redevelopment Project:

• As a consequence of the ongoing COVID-19 pandemic, first production from the Tyra Redevelopment is expected in Q2 2023 instead of 2022 as previously communicated
• The project remains on track to be delivered within budget

Due to COVID-19, local governmental imposed restrictions at the fabrication yards have impacted the schedule of the new Tyra topsides, including through the global supply chain delivering key components for the topsides. As a direct consequence of this impact the installation of the four new topsides is rescheduled from 2021 to a 2022 installation-window. 

First production from the redeveloped Tyra is then expected in Q2 2023.

 Facts:  

• Noreco is a North Sea E&P company and the second largest producer in Denmark with a 36.8% ownership in The Danish Underground Consortium (“DUC”).
• The DUC is a partnership between the operator Total (43.2%), Noreco (36.8%) and Nordsøfonden (20%).
• The Tyra Field is the largest gas condensate field in the Danish Sector of the North Sea. Its facilities process more than 90% of the gas produced in Denmark, as well as the entire gas production of the DUC.
• Due to seabed subsidence, the Tyra field required a redevelopment, a project that was sanctioned by the DUC in 2017.
• The Tyra Redevelopment consists of three main elements: Removal and decommissioning of the prior Tyra platforms, reuse and 13 meters extension of the current jackets at six platforms that will have new topsides and a new process platform and a new accommodation platform. The project is, to date, the largest project carried out on Danish Continental Shelf. 
• When back in operation, Tyra is expected to reach peak production of approximately 60,000 boepd.

Original article link:

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Impact farms out South African offshore to Shell

Impact Oil & Gas Limited (“Impact” or the “Company”), a privately-owned, African-focused, exploration company, is pleased to announce that its wholly-owned subsidiary, Impact Africa Ltd has entered into an agreement with BG International Limited, a wholly owned subsidiary of Royal Dutch Shell plc (“Shell”) for the farm-out of a 50% working interest and operatorship in the Transkei & Algoa exploration right, offshore South Africa (Exploration Right reference 12/3/252).

Under the terms of the farm-out agreement, Shell will acquire a 50% working interest in the Transkei & Algoa blocks and operatorship. Shell has also been granted the option to acquire an additional 5% working interest should the joint venture elect to move into the Third Renewal Period, which is expected to be approximately 2024.

Siraj Ahmed, CEO of Impact Oil & Gas, commented:

“We are delighted to have secured a farm-out partner of Shell’s calibre, highlighting the significant value potential of our exceptional South African exploration portfolio. Shell joins the Transkei & Algoa licence at a very exciting time for exploration drilling in South Africa. They bring substantial exploration expertise, with particular understanding of the potential of offshore South Africa, and an agreed strategy to accelerate the work programme to build upon the considerable work already undertaken by Impact and the previous JV partnership.”

Whilst part of the same licence, the Transkei & Algoa blocks have different geological settings. The Algoa block is situated in the South Outeniqua Basin, a short distance east of Block 11B/12B, containing the Brulpadda gas condensate discovery and where Total has recently announced a further significant gas condensate discovery, following the successful drilling of the Luiperd-1X exploration well, which it is currently testing. The Transkei block is situated north-east of Algoa in the Natal Trough Basin where Impact has identified highly material prospectivity associated with several large submarine fan bodies, which this joint venture will explore with focused 3D seismic data and then potential exploratory drilling. Impact and Shell plan to acquire over 6,000km² of 3D seismic data during the first available seismic window following completion of the transaction. This window is expected to be in the first quarter of 2022.

Closing of the transaction is subject to customary conditions, including the approval of the Government of South Africa.

The participating interests in the Transkei & Algoa blocks following completion of the farm-out by Impact will be as follows: Shell (Operator), 50% and Impact, 50%.

Transkei & Algoa, offshore South Africa

Exploration Right 12/3/252, Transkei & Algoa is located offshore eastern South Africa and covers approximately 45,838km² in water depths up to 3,000 metres. The licence was initially awarded to Impact as a Technical Cooperation Permit in 2012, followed by an application for an Exploration Right, which was granted in 2014.

Original article link: https://impactoilandgas.com/farm-out-of-transkei-algoa-to-shell/

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Idemitsu Petroleum Norge to sell part of participating interests of Production Licenses in Barents Sea

20^th October 2020

Idemitsu Kosan Co.,Ltd. (Head Office: Chiyoda-ku, Tokyo; Representative Director and CEO: Shunichi Kito, the “Company”) is pleased to announce that Idemitsu Petroleum Norge AS^*1 (Head Office: Oslo Norway; Managing Director: Futoshi Tsuneyama), a wholly owned subsidiary of Idemitsu Snorre Oil Development Co., Ltd. (Head Office: Chiyoda-ku, Tokyo; President: Jun Miki)^*2, has entered into an agreement with Lundin Energy Norway AS (Head Office: Oslo Norway), to sell a 10% participating interest in production licences PL 537 & PL 537B including Wisting discovery and a 15% participating interest in production licences PL 609, PL 609B, PL 609C, PL 609D and PL 851 including Alta discovery in the Barents Sea, Norway.

*1: Shareholders: Idemitsu Snorre Oil Development Co., Ltd. (100 %)

*2: Shareholders: Idemitsu Kosan Co.,Ltd. (50.5 %), Osakagas Summit Resources Co., Ltd. (49.5 %)

Idemitsu Petroleum Norge AS acquired a 20% participating interest in PL537 & PL537B, and a 30% participating interest in PL 609, PL 609B, PL 609C, PL 609D and PL 851 through the Norwegian licensing rounds. The Wisting and Alta discoveries were made in PL 537 in 2013 and PL 609 in 2014 respectively. Studies are ongoing with a view to progressing these discoveries to development.

The transaction is part of the Company’s long-term business strategy, and capital and cash management plan. It will reduce development cost exposure in future. A cash consideration of USD125 million is to be paid on completion of the transaction. (The transaction is subject to Norwegian authority approvals.)

【Change of licence share in the production licenses in Barents Sea】

Original article link:

https://www.idemitsu.com/news/2020/201020.html

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