Oil and crude giant ConocoPhillips is set to exit from the North Sea region after the company announced its agreement for sale of its oil and gas operations of the United Kingdom in a deal that is worth almost $2.7 billion.
According to the deal, Chrysaor E&P, a company focused on producing oil and natural gas from the North Sea, would purchase for $2.675 billion the United Kingdom subsidiaries form the Houston-based driller ConocoPhillips. According to the companies, this deal would be closed by then by the second half of 2019.
According to investment bank Jefferies, which acted as Chrysaor’s financial adviser, outside of the United States, this deal would be the largest one in the exploration and production field.
The announcement of the deal saw the shares of ConocoPhillips rising slightly.
The assets that were sold had been marketed by ConocoPhillips for a number of months now. The commercial trading business in London of the company and its almost 40 per cent stake in the Teesside oil terminal would not be part of the deal and would remain with the company. The Teesside oil terminal, which is a store house for oil and gas drilled in the North Sea fields, would continue to be operated by the company.
“We are extremely proud of the legacy we’ve built in the U.K. over the last 50 years and are pleased that Chrysaor recognizes the value of this business,” ConocoPhillips Chairman and CEO Ryan Lance said in a statement. “This disposition is part of our ongoing effort to hone our portfolio and focus our investments across future low cost of supply opportunities.”
The major part of the portfolio restructuring at the company was almost complete, Conoco Chief Operating Officer Matthew Fox had said earlier this year. However at the time the comment was made, the company only had to sell its North Sea assets. In 2018, the company earned nearly $1.1 billion on dispositions.
Following the completion of the deal, Chrysaor would become one of the largest operators and produce of crude and gas in the UK North Sea.
The offshore assets that Chrysaor is set to purchase has a produced about 72,000 barrels of oil equivalent per day in 2018. With this addition, the pro forma 2018 output of Chrysaor would be about 177,000 boepd of oil and gas. ConocoPhillips’ stake in the Clair Field area and two major offshore production hubs, Britannia and J‐Block, would come udenr teh control fo the company because of the deal.
“This significant acquisition reflects our continuing belief that the UK North Sea has material future potential for oil and gas production,” Chrysaor CEO and former Hess executive Phil Kirk said in a statement.
This deal is in line with the trend of exiting the North Sea by major oil companies while the region is slowly being dominated by independent drillers who that are backed by private equity firms.
(Adapted from CNBC.com)