27th Oct 2015 08:42
LONDON (Alliance News) - Serica Energy PLC Tuesday said its resource at the Columbus field offshore the UK has increased by 50% after striking a deal with major companies BG Group PLC and SSE PLC.
Serica is currently involved in a joint venture on block 23/16f with Endeavour Energy and EOG Resources whilst a separate project at the adjacent block 23/21a is being run by BG International Ltd and SSE E&P UK Ltd.
Both those blocks cover the Columbus field, and on Tuesday Serica and its partners struck a deal whereby BG and SSE will transfer its equity in the part of their block that covers the Columbus field to Serica and its partners.
The deal is significant, as it means Serica's contingent resources from the Columbus field have increased by 50% as a result to 7.8 million barrels of oil equivalent. The company also said the deal will mean it and its partners will have greater autonomy over the Columbus field.
Following the transfer of BG's and SSE's interest in the Columbus field, Serica and its two partners will wholly own the field, with Serica operating the project with a 50% stake.
"As well as increasing the Columbus participants' share of the total Columbus field, the transaction provides the Columbus participants with greater autonomy, and the ability to push the project forward without the encumbrance of unitisation," it said.
"There is the added benefit that future production from Columbus could help extend the life of other fields and facilities in the area, including the Erskine field in which Serica has an 18% interest," added Chairman Tony Craven.
Serica said BG and SSE have agreed to the transfer n return for a "nominal sum", but did not disclose any other financial details of the deal.
Importantly, the development of the Columbus field is reliant on Serica and its partners being able to secure access to local infrastructure to transport any production from the field, including pipelines.
The Oil and Gas Authority, the UK's industry regulator, must approve the deal between Serica, its partners and the two major companies and will also guide Serica on how to gain access to the local infrastructure. It has already granted the block with an extension to allow the partners time to secure an infrastructure partner.
"I would like to acknowledge the Oil and Gas Authority's role in helping to unlock the potential of the Columbus project and to thank BG and SSE for cooperating with the Columbus partners to reach this agreement," added Craven.
Serica shares were up 3.6% to 11.52 pence per share on Tuesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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