EnQuest has signed an agreement with Suncor Energy UK Limited  to purchase Suncor’s entire 26.69% non-operated equity interest in the Golden Eagle area, comprising the producing Golden Eagle, Peregrine and Solitaire fields (‘the Transaction’) for an initial consideration of US$325 million.

HIGHLIGHTS

• Adds immediate incremental production of c.10 kboepd, c.18 MMbbls to net 2P reserves and c.5MMbbls to net 2C resources1
• Provides significant value enhancement in excess of US$100 million NPV(10) at a long-term oil price of US$50/bbl, primarily related to accelerated partial use of EnQuest’s tax losses
• Low cost structure with 2021 unit operating expenditure expected to be c.US$5/Boe and life of field operating and capital expenditure anticipated to be c.US$20/Boe
• Significant remaining development potential, with anticipated field life extending into the early 2030’s1:
  • Four-well infill drilling programme ongoing, with two of the four wells onstream. The programme is scheduled to conclude prior to completion of the Transaction, which is expected to take place no later than the end of the third quarter
  • A number of unsanctioned activities associated with further sub-sea and platform infill drilling, topsides water debottlenecking and an active well intervention programme are being assessed
  • Various third-party near-field tie-back opportunities being considered to utilise available capacity of the facilities
• Strong safety record with zero lost time injuries since start-up and zero safety critical maintenance backlog at the end of 2020
• Materially lower CO2e intensity ratio than UK North Sea industry average 

EnQuest Chief Executive, Amjad Bseisu, said: 
“We are delighted we have agreed the acquisition of a material interest in Golden Eagle, a high-quality, low-cost UK North Sea development. Upon completion, this acquisition will add immediate material production and cash flow to EnQuest and will allow us to accelerate use of our substantial tax losses. It also demonstrates our continued commitment to the UK North Sea and diversifies our existing production base. 

“The assets have a strong safety record and a lower than average CO2e emissions intensity ratio. 

“We look forward to a productive partnership with the operator, CNOOC and our future joint venture partners, NEO Energy and ONE DYA,” EnQuest Chief Executive, Amjad Bseisu, said. 

Transaction details

EnQuest has agreed to acquire 100% of the shares in North Sea (Golden Eagle) Resources Ltd, a new company which will, at completion of the Transaction, hold Suncor’s non-operated equity interest in the Golden Eagle area. 

The initial consideration is US$325 million (which is subject to working capital and other adjustments), with additional contingent consideration of up to US$50 million. The contingent consideration is payable in the second half of 2023, if between July 2021 and June 2023 the Dated Brent average crude price equals or exceeds US$55/bbl, upon which US$25 million is payable, or if the Dated Brent average crude price equals or exceeds US$65/bbl, upon which US$50 million is payable. A deposit of c.US$3 million (being part of the initial consideration) is being provided by EnQuest which will be forfeited in most circumstances if the Transaction does not complete.

EnQuest plans to finance the Transaction through a combination of a new secured debt facility, interim period post-tax cash flows between the economic effective date of 1 January 2021 and completion, and an equity raise.