Dyas and Petrofac agree to sell interests in North Sea oil and gas project to Ithaca Energy

Ithaca Energy Limited has announced that it has entered into agreements to acquire all the Greater Stella Area (GSA) licences and associated infrastructure interests of Dyas UK Limited and Petrofac Limited. The GSA is located in the heart of the Central Graben area of the Central North Sea, on the UK Continental Shelf. Subsea wells owned by the three companies are tied back to the “FPF-1” floating production unit, with the onward export of oil and gas. 

Ithaca and Dyas, through a joint venture, acquired interests in the licence for two fields within the GSA between 2008 and 2009.  Ithaca and Dyas introduced Petrofac as a new strategic partner in 2011. Ownership of the licenses and associated infrastructure was formerly split 54.66% (Ithaca), 25.34% (Dyas), 20% (Petrofac).

As a result of the transactions, Ithaca’s pro-forma 2018 production is forecast to increase by approximately 50% to 22,000 barrels of oil equivalent per day, with pro-forma 2018 unit operating costs forecast to reduce to approximately US$18 per barrel of oil equivalent.

Based on the most recent independent reserves evaluation performed by Sproule International Limited, the transactions are estimated to increase Ithaca’s proven and probable reserves as of 31 December 2017 by over 20 million barrels of oil equivalent.

The effective date of the acquisition is 1 January 2018, with the consideration paid at completion being subject to conventional adjustments to reflect the income and costs associated with the assets since then.  The transactions are expected to complete around the end of 2018 and are subject to customary regulatory approvals.

The consideration payable comprises an initial payment at completion of the transaction, which is forecast to total approximately US$130 million (net of estimated interim period cashflows of US$80 million), plus deferred payments of US$120 million payable over the period 2020 to 2023.  Dependent on the future performance of the Stella and Harrier fields, Petrofac also has the opportunity to earn up to an additional US$28 million by 2023.

The transaction is to be funded from an increased and extended reserve based lending facility.