EnQuest PLC (together with its subsidiaries, ‘EnQuest’), an independent oil and gas production and development company listed on the London and Stockholm stock exchanges (ENQ.L and ENQ.ST), is pleased to announce it has signed an agreement with Suncor Energy UK Limited (’Suncor’) to purchase Suncor’s entire 26.69% non-operated equity interest in the Golden Eagle area, comprising the producing Golden Eagle, Peregrine and Solitaire fields (‘the Transaction’) for an initial consideration of US$325 million.
1 EnQuest estimates
“We are delighted we have agreed the acquisition of a material interest in Golden Eagle, a high-quality, low-cost UK North Sea development. Upon completion, this acquisition will add immediate material production and cash flow to EnQuest and will allow us to accelerate use of our substantial tax losses. It also demonstrates our continued commitment to the UK North Sea and diversifies our existing production base.
“The assets have a strong safety record and a lower than average CO2e emissions intensity ratio.
“We look forward to a productive partnership with the operator, CNOOC and our future joint venture partners, NEO Energy and ONE DYAS.”
EnQuest has agreed to acquire 100% of the shares in North Sea (Golden Eagle) Resources Ltd, a new company which will, at completion of the Transaction, hold Suncor’s non-operated equity interest in the Golden Eagle area.
The initial consideration is US$325 million (which is subject to working capital and other adjustments), with additional contingent consideration of up to US$50 million. The contingent consideration is payable in the second half of 2023, if between July 2021 and June 2023 the Dated Brent average crude price equals or exceeds US$55/bbl, upon which US$25 million is payable, or if the Dated Brent average crude price equals or exceeds US$65/bbl, upon which US$50 million is payable. A deposit of c.US$3 million (being part of the initial consideration) is being provided by EnQuest which will be forfeited in most circumstances if the Transaction does not complete.
EnQuest plans to finance the Transaction through a combination of a new secured debt facility, interim period post-tax cash flows between the economic effective date of 1 January 2021 and completion, and an equity raise (collectively the ‘funding arrangements’).
It is anticipated the new secured debt facility, in respect of which the Group is currently working closely with its leading lending banks BNP and DNB, will incorporate the refinancing of the existing outstanding senior credit facility. Further, the Group anticipates raising up to US$50 million of equity through a placing and open offer, in which shareholders related to Amjad Bseisu are expected to participate in line with their equity holdings. Amjad Bseisu and/or persons related to him are expected to make financing commitments assuring there will be no funding shortfall in respect of this $50 million. These financing commitments constitute a related party transaction and will therefore require independent shareholder approval. J.P. Morgan Securities plc (which conducts its UK investment banking activities as J.P. Morgan Cazenove)(“J.P. Morgan Cazenove”) is acting as global coordinator, bookrunner and sponsor to EnQuest in connection with the placing and open offer, as financial adviser and sponsor to EnQuest in connection with the Transaction and as sponsor to EnQuest in connection with the related party transaction.
Completion of the Transaction is subject to the satisfaction or waiver of various conditions precedent, including putting in place the funding arrangements, approval from EnQuest's shareholders by ordinary resolutions, the approvals of joint venture partners in the Golden Eagle area and receipt of other customary regulatory and third party consents.
No stand-alone balance sheet valuation or profit before tax associated with Suncor’s assets in the Golden Eagle area are currently available.
Since the Transaction constitutes a reverse takeover for the purposes of the Listing Rules, EnQuest will need to seek shareholder approval and re-admission of its ordinary shares upon completion to the Official List of the FCA and to trading on the main market of the London Stock Exchange.
Preparation of a class 1 circular and prospectus containing further details of the Transaction, the financing arrangements and the notice convening the required general meeting will be prepared with a copy sent to qualifying shareholders as soon as practicable after the new secured debt facility has been agreed. The class 1 circular and prospectus will also be made available on the website of EnQuest plc.
A presentation to analysts and investors will be held at 09:00 on 4 February 2021. The presentation and Q&A will also be accessible via an audio webcast, available on the investor relations section of the EnQuest website. A conference call facility will also be available at 09:00 on the following numbers:
Conference call details:
UK: +44 (0) 800 279 6619
International: +44 (0) 207 192 8338
Confirmation Code: 9879381
Today the Company also published an operations update and guidance for 2021 which is available on the website of EnQuest plc.
This announcement has been determined to contain inside information. The person responsible for the release of this announcement is Stefan Ricketts, Commercial and Legal Director.
Read the latest issue of the OGV Energy magazine HERE.
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