Hungarian oil and gas company MOL has signed a deal to sell its entire upstream portfolio in the UK North Sea to Waldorf Production.
The divested offshore assets include MOL’s 20% stake in the Catcher field, a 50% stake in Scolty & Crathes, and a 21.8% stake in Scott as well as stakes in a number of other licenses.
MOL said its UK working interest production peaked above 18 mboepd in 2019 and has been falling in the last two years, with fourth-quarter 2021 production marginally above 12 mboepd. MOL’s corresponding proved and probable reserves (SPE 2P) amounted to 14.9 MMboe at the end of 2021.
According to MOL, Waldorf offered a base cash consideration of $305 million, which is subject to customary purchase price adjustments and is based on an economic effective date of January 1, 2021. In addition, the agreement contains an earn-out scheme mainly dependent on oil prices during 2022-2025.
Waldorf will also take upon itself all future field abandonment liabilities such that on completion MOL said it would "derecognize provisions of around USD 350 million."
MOL also said its average lifting cost would improve following the completion of the transaction, as the production costs of the UK assets exceed the average lifting costs of the rest of MOL’s E&P portfolio.
The closing of the transaction is subject to obtaining necessary approvals and is expected to take place in the second half of 2022, MOL said.
Doubling stake in Catcher
In a separate statement, Waldorf Production confirmed entering into the sale and purchase agreement with MOL, and said the acquisition would bolster Waldorf’s UKCS reserves and production "materially" including doubling its interest in the Greater Catcher Area in the North Sea. To remind, Waldorf in November 2021 bought Cairn's entire non-operated 20 percent interest in the Catcher field and 29.5 percent interest in the Kraken field.
Erik Brodahl, Chief Executive of Waldorf said: “We are excited to acquire MOL’s UK portfolio and by so doing to double our stake in GCA. Pro forma for the transaction Waldorf’s 2021 production increases by c. 55% to c.34,000 boe per day and end 2020 2P reserves by almost a third from 51.6 mmboe to 67.5 mmboe. Waldorf continues to look for further growth opportunities building on its resilient non-operated North Sea production base in the near-term.”
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