BP to sell Bruce assets to Serica

BP is to sell a package of its interests in the Bruce assets in the North Sea to Serica Energy. BP currently operates the assets, which comprise the Bruce, Keith and Rhum fields, three bridge-linked platforms and associated subsea infrastructure. Under the terms of the agreement, Serica will pay BP an upfront payment of £12.8mn, a share of cash flows over the next four years, a consideration equivalent to 30% of BP’s post-tax decommissioning costs and several contingent payments dependent on future asset performance and product prices. Overall, BP expects to receive payments of around £300mn, the majority of which will be received over the next four years.

Bernard Looney, BP Chief Executive, Upstream, said: ‘This is an example of BP’s Upstream strategy in action – refreshing our portfolio and focusing our activity on assets which will add most value over the long-term. We remain committed to the North Sea and continue to invest. We expect our production there to double to around 200,000 boe/d by 2020 through new projects like Quad 204 and Clair Ridge.’ He continued: ‘While the Bruce assets are no longer core to BP, we are confident that Serica is the right owner and operator to maximise their continuing value for both companies and for the UK.’

The Bruce field was discovered in 1974 and came into production in 1993, with Keith tied back to Bruce in 2000. Rhum, a high-pressure, high-temperature satellite field located 40 km to the north of Bruce, was brought into production in 2005.

BP will be transferring 36% of its 37% stake in Bruce (partners Total 43.25%, BHP Billiton 16%, Marubeni 3.75%), retaining 1% to oversee its interests as the structure of the agreement is based on staged payments to BP that depend on the operational and financial performance of the assets in future years. It will also transfer its entire 34.84% interest in Keith (partners BHP Billiton 31.83%, Total 25%, Marubeni 8.33%) and its 50% stake in Rhum (partner Iranian Oil Company (UK) 50%).

BP will also retain financial liability for decommissioning of the assets, although planning and execution of decommissioning activity will be undertaken by Serica.

In May, BP brought the major Quad 204 redevelopment west of Shetland into production, the third of seven global major projects starting production for the company in 2017. Clair Ridge, the second phase of the giant Clair field, is expected to begin production next year. BP is also investing significantly in the reliability and integrity of its existing North Sea assets through an extensive renewal programme. In 2016, it completed a $1bn investment in the ETAP cluster of fields which is expected to extend field life until at least 2035. BP is also in the middle of a six-well exploration programme in the UK, in addition to drilling approximately 50 development wells over the next three to four years. It was awarded seven licences, incorporating 25 blocks or part blocks, as part of the 29^th licence round award announcement earlier this year. These licences include firm commitment for three additional exploration wells.

To find out how BP is harnessing the power of digital technology to monitor, predict and optimise operations, see the forthcoming December 2017/January 2018 issue of Petroleum Review.

Bruce photo: BP