KEYFACT Energy
Ithaca Energy Limited has entered into agreements to acquire all the Greater Stella Area (“GSA”) licences and associated infrastructure interests of Dyas UK Limited and Petrofac Limited. The acquisition materially increases the Company’s production and reserves base, while simultaneously delivering full control and flexibility over the long term development of the GSA production hub.
As a result of the transactions, the Company’s pro-forma 2018 production is forecast to increase by approximately 50% to 22,000 barrels of oil equivalent per day, with pro-forma 2018 unit operating costs forecast to reduce to approximately $18 per barrel of oil equivalent.
Based on the most recent independent reserves evaluation performed by Sproule International Limited (“Sproule”), the transactions are estimated to increase the Company’s proven and probable (“2P”) reserves as of 31 December 2017 by over 20 million barrels of oil equivalent.
The effective date of the acquisition is 1 January 2018 (“Effective Date”), with the consideration paid at completion being subject to conventional adjustments to reflect the income and costs associated with the assets since the Effective Date. The transactions are expected to complete around the end of 2018 and are subject to customary regulatory approvals.
In aggregate, the transaction consideration reflects payments associated with the acquisition of the assets of $190 million and a revision and rescheduling of Ithaca’s existing $140 million deferred payments to Petrofac that resulted from completion of the “FPF-1” modifications programme and the Company’s accrual of associated capital allowances.
In summary, the consideration payable comprises an initial payment at completion of the transaction, which is forecast to total approximately $130 million (net of estimated interim period cashflows of $80 million), plus deferred payments of $120 million payable over the period 2020 to 2023. Dependent on the future performance of the Stella and Harrier fields, Petrofac also has the opportunity to earn up to an additional $28 million by 2023.
The transaction is to be funded from an increased and extended RBL facility.