TIDMENQ
RNS Number : 9845N
EnQuest PLC
04 February 2021
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS
RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION,
DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA OR
JAPAN OR ANY JURISDICTION IN WHICH THE DISTRIBUTION OR RELEASE
WOULD BE UNLAWFUL.
EnQuest PLC, 4 February 2021
EnQuest signs agreement to acquire equity interest in the Golden
Eagle development
EnQuest PLC (together with its subsidiaries, 'EnQuest'), an
independent oil and gas production and development company listed
on the London and Stockholm stock exchanges (ENQ.L and ENQ.ST), is
pleased to announce it has signed an agreement with Suncor Energy
UK Limited ('Suncor') to purchase Suncor's entire 26.69%
non-operated equity interest in the Golden Eagle area, comprising
the producing Golden Eagle, Peregrine and Solitaire fields ('the
Transaction') for an initial consideration of US$325 million.
Highlights
-- Adds immediate incremental production of c.10 kboepd, c.18
MMbbls to net 2P reserves and c.5MMbbls to net 2C resources(1)
-- Provides significant value enhancement in excess of US$100
million NPV(10)(1) at a long-term oil price of US$50/bbl, primarily
related to accelerated partial use of EnQuest's tax losses
-- Low cost structure with 2021 unit operating expenditure
expected to be c.US$5/Boe and life of field operating and capital
expenditure anticipated to be c.US$20/Boe(1)
-- Significant remaining development potential, with anticipated
field life extending into the early 2030's(1) :
-- Four-well infill drilling programme ongoing, with two of the
four wells onstream. The programme is scheduled to conclude prior
to completion of the Transaction, which is expected to take place
no later than the end of the third quarter
-- A number of unsanctioned activities associated with further
sub-sea and platform infill drilling, topsides water
debottlenecking and an active well intervention programme are being
assessed
-- Various third-party near-field tie-back opportunities being
considered to utilise available capacity of the facilities
-- Strong safety record with zero lost time injuries since
start-up and zero safety critical maintenance backlog at the end of
2020
-- Materially lower CO2e intensity ratio than UK North Sea
industry average
(1) EnQuest estimates
EnQuest Chief Executive, Amjad Bseisu, said:
"We are delighted we have agreed the acquisition of a material
interest in Golden Eagle, a high-quality, low-cost UK North Sea
development. Upon completion, this acquisition will add immediate
material production and cash flow to EnQuest and will allow us to
accelerate use of our substantial tax losses. It also demonstrates
our continued commitment to the UK North Sea and diversifies our
existing production base.
"The assets have a strong safety record and a lower than average
CO2e emissions intensity ratio.
"We look forward to a productive partnership with the operator,
CNOOC and our future joint venture partners, NEO Energy and ONE
DYAS."
Transaction details
EnQuest has agreed to acquire 100% of the shares in North Sea
(Golden Eagle) Resources Ltd, a new company which will, at
completion of the Transaction, hold Suncor's non-operated equity
interest in the Golden Eagle area.
The initial consideration is US$325 million (which is subject to
working capital and other adjustments), with additional contingent
consideration of up to US$50 million. The contingent consideration
is payable in the second half of 2023, if between July 2021 and
June 2023 the Dated Brent average crude price equals or exceeds
US$55/bbl, upon which US$25 million is payable, or if the Dated
Brent average crude price equals or exceeds US$65/bbl, upon which
US$50 million is payable. A deposit of c.US$3 million (being part
of the initial consideration) is being provided by EnQuest which
will be forfeited in most circumstances if the Transaction does not
complete.
EnQuest plans to finance the Transaction through a combination
of a new secured debt facility, interim period post-tax cash flows
between the economic effective date of 1 January 2021 and
completion, and an equity raise (collectively the 'funding
arrangements').
It is anticipated the new secured debt facility, in respect of
which the Group is currently working closely with its leading
lending banks BNP and DNB, will incorporate the refinancing of the
existing outstanding senior credit facility. Further, the Group
anticipates raising up to US$50 million of equity through a placing
and open offer, in which shareholders related to Amjad Bseisu are
expected to participate in line with their equity holdings. Amjad
Bseisu and/or persons related to him are expected to make financing
commitments assuring there will be no funding shortfall in respect
of this $50 million. These financing commitments constitute a
related party transaction and will therefore require independent
shareholder approval. J.P. Morgan Securities plc (which conducts
its UK investment banking activities as J.P. Morgan Cazenove)("J.P.
Morgan Cazenove") is acting as global coordinator, bookrunner and
sponsor to EnQuest in connection with the placing and open offer,
as financial adviser and sponsor to EnQuest in connection with the
Transaction and as sponsor to EnQuest in connection with the
related party transaction.
Completion of the Transaction is subject to the satisfaction or
waiver of various conditions precedent, including putting in place
the funding arrangements, approval from EnQuest's shareholders by
ordinary resolutions, the approvals of joint venture partners in
the Golden Eagle area and receipt of other customary regulatory and
third party consents.
No stand-alone balance sheet valuation or profit before tax
associated with Suncor's assets in the Golden Eagle area are
currently available.
Since the Transaction constitutes a reverse takeover for the
purposes of the Listing Rules, EnQuest will need to seek
shareholder approval and re-admission of its ordinary shares upon
completion to the Official List of the FCA and to trading on the
main market of the London Stock Exchange.
Publication of the prospectus and circular
Preparation of a class 1 circular and prospectus containing
further details of the Transaction, the financing arrangements and
the notice convening the required general meeting will be prepared
with a copy sent to qualifying shareholders as soon as practicable
after the new secured debt facility has been agreed. The class 1
circular and prospectus will also be made available on the website
of EnQuest plc: https://www.enquest.com
Presentation to Analysts and Investors
A presentation to analysts and investors will be held at 09:00
today - London time. The presentation and Q&A will also be
accessible via an audio webcast, available on the investor
relations section of the EnQuest website at
https://www.enquest.com. A conference call facility will also be
available at 09:00 on the following numbers:
Conference call details:
UK: +44 (0) 800 279 6619
International: +44 (0) 207 192 8338
Confirmation Code: 9879381
Today the Company also published an operations update and
guidance for 2021 which is available on the website of EnQuest plc:
http://www.enquest.com/
This announcement has been determined to contain inside
information. The person responsible for the release of this
announcement is Stefan Ricketts, Commercial and Legal Director.
Ends
Notes to editors
Golden Eagle is operated by CNOOC International and located
about 111 kilometres northeast of Aberdeen. It is a relatively new
field having been discovered in 2007, developed by Nexen and
brought onstream in late 2014. Solitaire and Peregrine are two
satellites that tie back to the Golden Eagle facilities. Golden
Eagle is a modern, standalone processing facility consisting of a
wellhead platform and a production, utilities and quarters
platform.
At Golden Eagle, the operator estimates stock-tank oil initially
in place ('STOIIP') in excess of 400 MMbbls gross. The Upper
Jurassic and Lower Cretaceous Punt and Burns reservoirs produce a
good quality, sweet, low acid 36(o) API oil and are produced via 14
gas lifted wells. There are six water injection wells, all on the
Golden Eagle field itself. A four well infill programme is
currently in progress. Solitaire and Peregrine produce under
depletion.
Oil and gas are exported via the Flotta and SAGE pipeline
systems respectively.
For further information please contact:
EnQuest PLC Tel: +44 (0)20 7925
4900
Amjad Bseisu (Chief Executive)
Jonathan Swinney (Chief Financial Officer)
Ian Wood (Head of Communications & Investor
Relations)
Jonathan Edwards (Senior Investor Relations
& Communications Manager)
Tulchan Communications Tel: +44 (0)20 7353
4200
Martin Robinson
Martin Pengelley
Harry Cameron
ENQUEST
EnQuest is providing creative solutions through the energy
transition. As an independent production and development company
with operations in the UK North Sea and Malaysia, the Group's
strategic vision is to be the operator of choice for maturing and
underdeveloped hydrocarbon assets by focusing on operational
excellence, differential capability, value enhancement and
financial discipline.
EnQuest PLC trades on both the London Stock Exchange and the
NASDAQ OMX Stockholm.
Please visit our website www.enquest.com for more information on
our global operations.
Forward-looking statements: This announcement may contain
certain forward-looking statements with respect to EnQuest's
expectations and plans, strategy, management's objectives, future
performance, production, reserves, costs, revenues and other trend
information. These statements and forecasts involve risk and
uncertainty because they relate to events and depend upon
circumstances that may occur in the future. There are a number of
factors which could cause actual results or developments to differ
materially from those expressed or implied by these forward-looking
statements and forecasts. The statements have been made with
reference to forecast price changes, economic conditions and the
current regulatory environment. Nothing in this announcement should
be construed as a profit forecast. Past share performance cannot be
relied upon as a guide to future performance.
IMPORTANT INFORMATION
The distribution of this announcement and any proposed offering,
placing and/or issue of the securities referred to herein in
certain jurisdictions may be restricted by law. No action has been
taken by the Company, J.P Morgan Cazenove or any of their
respective affiliates that would permit an offer of securities or
possession or distribution of this announcement or any other
offering or publicity material relating to securities in any
jurisdiction where action for that purpose is required. Persons
into whose possession this announcement comes are required by the
Company and J.P. Morgan Cazenove to inform themselves about and to
observe any such restrictions.
This announcement is for information purposes only and shall not
constitute an offer to sell or issue or the solicitation of an
offer to buy, subscribe for or otherwise acquire securities in any
jurisdiction in which any such offer or solicitation would be
unlawful. Any failure to comply with this restriction may
constitute a violation of the securities laws of such
jurisdictions.
This announcement or any part of it does not constitute or form
part of any offer to issue or sell, or the solicitation of an offer
to acquire, purchase or subscribe for, any securities in the United
States (including its territories and possessions, any state of the
United States and the District of Columbia) (the "United States" or
"US"), Australia, South Africa, Japan or any jurisdiction in which
the same would be unlawful. No public offering of securities is
being made in any such jurisdiction.
The securities referred to herein have not been and will not be
registered under the US Securities Act of 1933, as amended (the
"Securities Act"), or under the securities laws or with any
securities regulatory authority of any state or other jurisdiction
of the United States, and accordingly may not be offered, sold,
pledged or transferred, directly or indirectly, in, into or within
the United States except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act and the securities laws of any relevant state or
jurisdiction of the United States. There is no intention to
register any portion of any offering in the United States or to
conduct a public offering of securities in the United States.
J.P. Morgan Securities plc, which conducts its UK investment
banking activities as J.P. Morgan Cazenove, and which is authorised
by the Prudential Regulation Authority and regulated in the United
Kingdom by the Financial Conduct Authority and the Prudential
Regulation Authority, is acting exclusively for EnQuest PLC and no
one else in connection with the Transaction or any other matter
referred to in this announcement and will not be responsible to
anyone other than EnQuest PLC for providing the protections
afforded to clients of J.P. Morgan Cazenove nor for providing
advice in relation to the Transaction or any other matter referred
to in this announcement. Neither J.P. Morgan Cazenove nor any of
its subsidiaries, branches or affiliates owes or accepts any duty,
liability or responsibility whatsoever (whether direct or indirect,
whether in contract, in tort, under statute or otherwise) to any
person who is not its client in connection with this announcement,
any statements contained herein or otherwise.
This announcement does not constitute a recommendation
concerning any investor's options with respect to the proposed
placing and open offer. The price of shares and any income expected
from them may go down as well as up and investors may not get back
the full amount invested upon disposal of the shares. Past
performance is no guide to future performance. The contents of this
announcement are not to be construed as legal, business, financial
or tax advice. Each investor or prospective investor should consult
his, her or its own legal adviser, business adviser, financial
adviser or tax adviser for legal, financial, business or tax
advice.
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END
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