Faroe Petroleum and DONG E&P Norge have completed the acquisition deal consisting of five Norwegian North Sea oil and gas fields, with Faroe only paying a fraction of the original US$70.2 million price tag.
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Image of Trym subsea gas compression, from DONG. |
At completion of the deal, Faroe paid $26.7 million to acquire Ula (20%), Tambar (45%), Tambar East Unit (37.8%), Oselvar (55%) and Trym (50%). Faroe said the new, lower price tag reflected both economic production from 1 January 2016, which outperformed previous expectations, and other working capital adjustments.
Remaining proved and probable reserves from the acquisition as evaluated by Faroe as at 1 January 2016 were 19.8 MMboe (net), while the preliminary average economic production for the 11 months to 1 December 2016 was approximately 9900 boe/d (net).
“We now take this opportunity to upgrade our 2016 guidance with a narrower range from 17,000 to 18,000 boe/d, including economic production from the acquisition,” Faroe said in a statement.
“The production from the acquired assets has exceeded our expectations for the year to date in turn reducing the final consideration amount below guidance,” Graham Stewart, Faroe chief executive said. “The acquisition of these producing fields creates a new strategic hub for Faroe, centered around the Ula platform, in one of our core areas offshore Norway; synergies have already been realized with the upcoming development of our Oda field, announced last week, which will be tied back subsea to Ula.”
In November, DONG Energy announced its decision to exit the oil and gas business, to focus its efforts on the renewable sector.
“There can be no assurance as to the outcome or the timing of the completion of the process,” Henrik Poulsen, DONG president and CEO said last month.
Last week, Faroe partner Centrica revealed its plan to develop a $637 million subsea tieback at Oda in the Norwegian North Sea. The project will reuse the Oselvar infrastructure on the Ula platform as well as using gas and water produced from Oda to improve recovery from Ula, both recently acquired by Faroe from DONG.
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