Total divests UK assets to Petrogas
Total has signed a $635mn agreement to divest 10 of its UK non-core assets to Petrogas NEO UK, the exploration and production arm of the Oman-based conglomerate MB Holding. Petrogas has partnered with Norway-based private equity investor HitecVision.
Formerly owned by Maersk Oil, the assets are located in the eastern North Sea and comprise Dumbarton (100%), Balloch (100%), Lochranza (100%), Drumtochty (100%), Flyndre (65.94%), Affleck (66.67%), Cawdor (60.6%), Golden Eagle (31.56%), Scott (5.16%) and Telford (2.36%).
The assets are expected to produce 25,000 boe/d this year and are reported to hold over 30mn boe in remaining reserves.
Commenting on the news, Ross Cassidy, a Senior Research Analyst on Wood Mackenzie’s North Sea team, said: ‘The key asset in the package is the CNOOC- operated Golden Eagle field, which accounts for over half of this year’s expected production and most of the remaining value. The field is expected to produce to 2030. Several of the fields are due to cease production by 2025 and have near-term decommissioning liability. The new operator will no doubt aim to extend the life of these fields with fresh investment.’
He added: “The rationalisation of Total’s UK portfolio was expected following its takeover of Maersk in 2017, and is part of Total’s corporate strategy to lower the production costs of its global portfolio. However, even with this sale, Total remains one of the UK’s top producers in 2019, with production underpinned by Elgin-Franklin, Laggan-Tormore and Culzean.’
The deal is the latest example of the majors divesting non-core UK assets to private equity-backed companies and independents expanding their presence in the UK upstream sector.
For more on North Sea investments, see the forthcoming August 2019 issue of Petroleum Review.