CHRYSAOR has signalled a major vote of confidence in the future potential of the North Sea as it clinched a second major acquisition in the basin in two years.
The private equity backed player is now one of the biggest producers in the area after acquiring the UK business of ConocoPhillips for $2.675 billion (£2.06bn). The deal brings to a close 50 years of North Sea exploration and production activity by the US energy giant, which had been looking to offload its UK business since early last year.
Chrysaor has bought assets from ConocoPhillips which produced around 72,000 barrels of oil equivalent (boepd) in 2018. The deal lifted Chrysaor’s pro forma production for 2018 to 177,000 boepd. It comes after Chrysaor paid $3bn to acquire a huge basket of North Sea assets from Shell in January 2017, which were expected to produce around 120,000 boepd that year.
READ MORE: Chrysaor eyes North Sea growth opportunities from Aberdeen operations centre
Industry sources say the latest acquisition makes Chrysaor the largest oil and gas producer in the North Sea, marginally ahead of Total.
Three material assets have been added to the Chrysaor portfolio as a result of the ConocoPhillips deal, including two new operated hubs in the UK Central North Sea – Britannia and J-Block. The third is an interest in the Clair field area west of Shetlands, complementing Chrysaor’s existing position in the area’s Shiehallion field, gained through the Shell deal. BP is the operator of the Shiehallion and Clair fields west of Shetland.
In addition, Chrysaor will take over the decommissioning programme on ConocoPhillips UK’s end-of-life assets in the UK Southern North Sea.
As of the deal’s effective date of January 1, 2019, ConocoPhillips UK’s assets contain more 280 million barrels of oil equivalent proved and probable oil and gas reserves, with a further significant contingent resource base.
READ MORE: North Sea oil firm enters big league with deal for assets off Shetland and Aberdeen
Chrysaor chief executive Phil Kirk said: “This significant acquisition reflects our continuing belief that the UK North Sea has material future potential for oil and gas production.
“Acquiring ConocoPhillips UK accelerates our strategy and further strengthens our position as one of the leading independent exploration and production companies in Europe. These assets complement our existing operations and, with operating costs at less than $15 per barrel across the enlarged group, our portfolio delivers high margins and significant positive cash flow.”
He added: “In the West of Shetlands region, we have secured long life cashflows from two world‐class fields operated by BP. Chrysaor’s West of Shetlands position also provides exposure to a developing region with significant interest and momentum from major oil companies. We will seek to build on that through the acquisition of additional interests and acreage.”
Chrysaor’s latest move underlines the confidence smaller players have in the future of the basin, with several big names having retrenched from the North Sea following the plunge in crude prices in the latter part of 2014.
London-listed RockRose moved quickly to make a flurry of acquisitions in light of the downturn after founding in 2015, most recently clinching a $140 million (£107m) deal to buy the North Sea portfolio of US heavyweight Marathon.
Serica Energy has also been on the North Sea acquisition trail, snapping up stakes in the Bruce and Keith fields from Japan’s Marubeni that allowed it to acquire around one million barrels reserves for $1m in November. It was the fourth deal that Aim-listed Serica had agreed in the Bruce and Keith fields in the preceding 12 months.
Ryan Lance, chairman and chief executive of ConocoPhillips, said: “We are extremely proud of the legacy we’ve built in the U.K. over the last 50 years and are pleased that Chrysaor recognizes the value of this business. This disposition is part of our ongoing effort to hone our portfolio and focus our investments across future low cost of supply opportunities.”
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here