Scotland-based Verus Petroleum has agreed to acquire Cieco Exploration & Production (UK) from Japanese conglomerate Itochu for $400m.
Through the acquisition, Verus Petroleum will be adding Cieco’s 23.1% stake in the Western Isles Development Project and a stake of 25.8% in the Hudson field, both located in the UK North Sea.
In the midstream segment, the Scottish oil and gas company will be adding Cieco’s stake of 2% in the Brent Pipeline System and a stake of 1.2% in the Sullom Voe oil terminal.
Overall the acquisition of Cieco will add nearly 11,000 barrels of oil equivalent per day (boepd) to the daily production of Verus Petroleum. With the acquired company being an asset holding company, the deal will not involve transfer of any employees.
Verus Petroleum CEO Alan Curran said: “Verus is pleased to have signed this SPA with ITOCHU, which is aligned with our strategy to expand our production base and cash flow through the acquisition of high quality production assets.
“We are delighted to acquire high value barrels with the Western Isles production in particular having very low lifting costs and being a long-life asset with strong cash generation.”
In the Western Isles Development Project, which started production in November 2017, Verus Petroleum will be partnered by Dana Petroleum, the operator of the North Sea oil field with a stake of 76.9%. The project involved development of the Harris and Barra oil fields in the Northern North Sea.
The Hudson Field, on the other hand, which contains nearly 200 million barrels of oil in place, has been in production from several years through seven wells that are supported by two injection wells.
The produced fluids from the Hudson Field are flown to the Tern platform, where they are processed and the resulting oil is transported in to the Brent Pipeline System and the onshore Sullom Voe oil terminal.
Verus Petroleum will be partnered in the Hudson Field by operator Dana Petroleum (47.5%) and TAQA (26.73%).
Curran added: “This transaction builds on our Boa oil field acquisition in 2017, and our acquisition of interests in the Alba oil field and the Babbage gas field earlier this year. The combined Alba, Babbage and Cieco acquisitions increase our net production to around 18,000 boepd.”
Subject to customary regulatory approvals, the deal is expected to be closed in the fourth quarter of 2018.