David BurrowsSerica Energy is to acquire BP's interests in the Bruce, Keith and Rhum (BKR) fields in the North Sea and associated infrastructure.
Under the agreement, Serica will acquire a 36% interest in Bruce, a 34.83% interest in Keith and a 50% interest in Rhum. Subject to completion of the acquisition, approximately 110 BP staff will be transferred to Serica.
The acquisition is subject to certain regulatory, government and partner consents and completion is expected to take place in mid-2018.
The initial cost of the acquisition is £12.8m, to be adjusted for working capital, with additional contingent consideration amounts of up to £39.1m payable dependent on certain production and gas price thresholds being achieved.
Share of cashflow
BP will also receive a share of pre-tax net cash flow from the BKR Assets of 60% in 2018, 50% in 2019 and 40% in each of 2020 and 2021.
BP will retain liability for all decommissioning costs relating to facilities existing at Completion, including wells, associated with the BKR Assets acquired by Serica UK.
Serica UK will pay BP additional consideration equal to 30% of such costs at the time of decommissioning reduced by the tax relief that BP receives on these costs.
As part of the acquisition, Serica UK has entered into product sales agreements with BP to off-take Serica's share of gas and oil production from the BKR Assets on market terms.
The Board of Serica believes that the deal will be transformational for the company, positioning it as one of the leading mid-tier independent oil and gas producers on the UK Continental Shelf.