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EnQuest: completion of Magnus transaction

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Oilfield Technology,

EnQuest PLC (‘EnQuest’) has announced that it has completed the acquisition of the remaining 75% interest in the Magnus oil field (‘Magnus’), an additional 9.0% interest in the Sullom Voe Oil terminal and supply facility (‘SVT’) and additional interests in associated infrastructure from BP as planned.

As outlined in the announcement on 7 September 2018, the addition of Magnus is expected to add:

  • approximately 60 million boe of 2P reserves (equating to approximately 30% of the Group’s reserve base) as at 1 January 2018;
  • approximately 10 million boe of 2C resources (equating to approximately 6% of the Group’s resource base) as at 1 January 2018; and
  • approximately US$500 million of net present value to the Group at US$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 US$100 million (subject to customary completion adjustments). EnQuest has also paid its US$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% equity stake in Magnus, 15.1% in SVT, 18% 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.

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