Verus Petroleum announces $400m acquisition of North Sea operator Cieco

Verus Petroleum acquisition of Cieco : Scottish oil and gas company Verus Petroleum, has signed a $400 million Sale & Purchase Agreement (SPA)  with Japanese commodity trading house Itochu to acquire its subsidiary Cieco Exploration & Production (UK).

Verus Petroleum acquisition of Cieco will see the Scottish oil and gas company get a stake of 23.1% held by the latter in the Western Isles Development Project and also 25.8% stake in the Hudson field. The two fields are contained in the UK North Sea.

As part of the deal, Verus Petroleum will also take Cieco Exploration & Production’s 2% stake in the Brent Pipeline System and 1.2% stake in the Sullom Voe oil terminal.

Verus Petroleum acquisition of Cieco will increase the daily production of the Scottish oil and gas company to approximately 11,000 barrels of oil equivalent per day (boepd).

The Scottish oil and gas company said that as the acquired entity is an asset holding company, the transaction will not see the transfer of any personnel.

Verus Petroleum acquisition of Cieco Exploration & Production (UK). Image courtesy of suwatpo at FreeDigitalPhotos.net.

Verus Petroleum will fund the acquisition through combination of equity, existing cash reserves and debt. HitecVision, the majority owner of Verus Petroleum will be providing the equity.

Commenting on Verus Petroleum acquisition of Cieco, Alan Curran – CEO of Verus Petroleum said: “Verus is pleased to have signed this SPA with ITOCHU, which is aligned with our strategy to expand our production base and cash flow through the acquisition of high quality production assets. We are delighted to acquire high value barrels with the Western Isles production in particular having very low lifting costs and being a long-life asset with strong cash generation.

“This transaction builds on our Boa oil field acquisition in 2017, and our acquisition of interests in the Alba oil field and the Babbage gas field earlier this year. The combined Alba, Babbage and Cieco acquisitions increase our net production to around 18,000 boepd.

According to Alan Curran, the Western Isles development, which comprises the Harris and Barra oil fields, Production has crossed expectations since it began production in November 2017 and is presently on plateau at in excess of 40,000 boepd, while having 15 years of estimated field life.

For the Western Isles Development Project, Verus Petroleum partners with Dana Petroleum, which is the operator with 76.9% stake.

Partners of the Scottish oil and gas company in the Hudson field project are Dana Petroleum, the operator with 47.5% stake and TAQA with a 26.3% stake.

The Hudson field which has been producing since many years from a seven-well development supported by two injection wells, holds close to 200 million barrels of oil.

The production from the Hudson Field is sent to the Tern platform for processing, following which it is sent through the Brent Pipeline System and into the onshore Sullom Voe oil terminal.

Verus Petroleum acquisition of Cieco is anticipated to be wrapped up in the fourth quarter of this year should it receive customary regulatory approvals.