22nd Dec 2020 14:13
(Alliance News) - SSE PLC on Tuesday said it has agreed to sell its interests in its portfolio of gas exploration and production assets to Viaro Energy for GBP120 million.
The portfolio comprises non-operational stakes in over 15 producing fields in three regions in the North Sea.
Of this consideration, SSE will receive GBP25 million in cash on completion with the remainder, adjusted for leakage, forming a vendor loan. Additional consideration of up to GBP40 million is payable if the gas price in the second half of 2021 reaches agreed thresholds, and up to USD750,000 per billion cubic feet if the Glendronach prospect, in the Greater Laggan Area, successfully produces.
"There is currently expected to be a small gain on sale, which will be part of SSE's reported results," the FTSE 100 firm said.
As part of the transaction, SSE will retain an obligation to pay 60% of the decommissioning costs.
"SSE has stated for some time that its financial investment in E&P assets is a non-core activity and ultimately not aligned with its strategic focus on reaching net-zero emissions. This sale is part of SSE's strategy to refocus its investment on its core networks and renewables businesses," said SSE.
The energy utility said it has thus far secured over GBP1.4 billion from the disposal of non-core assets, as part of its GBP2 billion-plus disposal programme by autumn 2021.
In October, SSE agreed to sell its 50% share in energy-from-waste ventures Multifuel Energy Ltd and Multifuel Energy 2 Ltd for GBP995 million and in September said it would sell its 25% non-operating stake in Walney offshore wind farm for GBP350 million.
"We have said for some time that gas exploration and production assets are inconsistent with our future ambitions and vision to be a leading energy company in a net-zero world," said Finance Director Gregor Alexander.
Alexander added: "This sale clearly comes at a difficult time for the E&P sector, and the economy as a whole, but we believe it is the right move for our shareholders as we focus our resources on our core low-carbon businesses."
Shares in SSE were up 1.0% at 1,475.00 pence on Tuesday in London.
By Lucy Heming; [email protected]
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