Bridge Energy Announces Completion of Duart Field Acquisition

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23 Dec 2011

Bridge, the Oslo Axess-listed oil and gas exploration and production company (OAX: BRIDGE) is pleased to announce that it has completed the acquisition of a 50% working interest in the producing Duart field from Nexen Petroleum Dragon UK Limited for an adjusted consideration of $37.85 million (the "Transaction"). The interest will add daily production of 750 barrels of oil per day to Bridge.

The Duart field, situated in block 14/20 on the UK continental shelf, is a high quality Cretaceous interval oil reservoir contained in a simple high relief tilted fault block structure. The field was developed in 2007 with a single subsea development well near the crest of the structure, which is supported by a strong natural aquifer drive. The well is tied back to the nearby Talisman operated Tartan platform. Product from Duart is processed on Tartan and co-mingled with other Tartan area production before being piped to the Flotta oil storage terminal.

The Duart field working interest will add 1.0 million barrels of 2P producing reserves to Bridge as of 1st January 2011. Operating as a subsea tieback the field delivers low maintenance oil production with a high operating margin. Bridge estimates that at an oil price of $105/bbl it will receive c. $90/bbl after tax for each barrel produced from the Duart field in the period 2011 - 2014 as a result of the Company's accumulated tax pool.

The agreement has an effective date of 1st January 2011. At the completion date of 22nd December 2011 Bridge paid an adjusted consideration of $37.85 million. Bridge has received stock net to Bridge of 171,525 barrels of oil. At the current oil price of c. $105, the stock balance in tank has a gross value of $18.0 million, resulting in a net consideration of c. $19.85 million ($24.0/bbl at completion). The transaction has been funded in part by $13 million of senior debt from the Royal Bank of Scotland facility. In the period from 2012 to 2016, taking into account the Company's accrued tax losses which offset tax liability, the Company expects Duart to deliver in excess of $40 million post tax cash flow.

The subsea infrastructure has a relatively low exposure to decommissioning liability, which is estimated to be $8.8 million net to the 50% interest. The Duart field is expected to produce until 2021.

The Duart field has been shut in since 5 October 2011 as a result of planned maintenance activity on the host Tartan platform. The shut in was extended to cater for additional platform health and safety related work scopes. Both Tartan and Duart are expected to restart production in February 2012, based on the most recent information from the Operator, Talisman.

Bridge believes the Transaction has the potential to create significant additional value through the further exploitation and optimization of the acquired interests.

Bridge's Deputy CEO Tom Reynolds commented: "The completion of the Duart acquisition delivers additional high margin production in line with our previously communicated strategy and we will continue to pursue other similar opportunities. The Duart acquisition will deliver additional cash flow - sheltered by our accumulated "tax pool" - for re-investment in the business. Bridge now looks forward to a very active 2012, with four high impact exploration wells in our Norwegian portfolio and the Victoria phase II development project which will be progressed."

No agreements have been, or will be, entered into in connection with the Transaction for the benefit of the parties' board members or management.

The Company has used the prevailing oil price in the calculations used in this statement however it should be noted that oil price fluctuates. As a result the valuations and targeted cash flows are subject to change. To take account of this uncertainty the Company plans to enter into certain oil price hedging arrangements which will have the effect of securing a minimum price for a proportion of the Duart field oil.


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