EnQuest an independent oil and gas production and development company has announced the signing of Share Purchase agreement (SPA) with Whalsay Energy Holdings Limited to purchase their entire 100.00% equity interest in the P1078 licence containing the proven Bentley heavy-oil discovery.

This discovery is within 15 kilometres of the Group’s existing Kraken and Bressay operated interests, offering further long-term potential development opportunities and other synergies. The transaction will be effected through the acquisition of Whalsay’s subsidiary, Whalsay Energy Limited (‘WEL’) which holds the licence as its only asset, on a cash, liability and debt free basis.

On completion, EnQuest will fund certain accrued costs and obligations of WEL, expected to amount to less than $2 million. No other upfront consideration is payable. EnQuest will make deferred payments to Whalsay based on future revenues generated by WEL which are capped at $40 million.

Completion of the transaction is subject to the satisfaction of a number of conditions precedent, including the UK Oil and Gas Authority granting an extension of the existing licence term, which is currently due to expire 30 June 2021, and the receipt of other third party approvals.

As at 31 December 2019, the date of the most recent audited accounts, WEL had gross assets valued at around $95 million, consisting primarily of intangible assets representing historic capitalised exploration and evaluation activities on the Bentley licence. For the year ended 31 December 2019, WEL recorded a loss before tax of around $72 million, primarily resulting from the recognition of an impairment charge against the Bentley licence.