Serica Energy to Acquire BP’s Interest in Culzean Field in the North Sea
UK-based oil and gas company Serica Energy has announced an agreement to acquire BP’s entire stake in the P111 and P2544 licenses located in the UK Central North Sea. This acquisition primarily features a 32% non-operated working interest in the P111 license, home to the significant Culzean gas condensate field, along with the adjoining exploration license P2544.
Transaction Overview
– Effective Date: The economic effective date for this acquisition is set for September 1, 2025.
– Financial Terms: Serica Energy will make an upfront cash payment of $232 million (£174.89 million), subject to standard working capital adjustments.
– Contingent Payments: Additional payments will depend on successful exploration outcomes at the P2544 license and potential amendments to the UK ring-fence fiscal regime.
This acquisition is not without its conditions. In accordance with the joint operating agreement among the partners of the Culzean field, there exists a pre-emption period of 30 days. This period allows the current partners—TotalEnergies, which holds a 49.99% stake, and NEO NEXT, with an 18.01% stake—the right to acquire BP’s interests in the licenses under the same conditions agreed upon by Serica.
Implications for Serica Energy
Chris Cox, CEO of Serica Energy, remarked, “Should this transaction complete, it would deliver a step-change for Serica, adding significant production and cash flows from the largest producing gas field in the UK. Culzean is a world-class asset, delivering gas from a modern platform with exceptionally high uptime and low emissions.”
The deal is anticipated to finalize around the end of 2025, enhancing Serica’s position in the natural gas market.
Insights on Culzean Field
Discovered in 2008 and operational since 2019, the Culzean field is classified as a mid-life gas condensate field managed by TotalEnergies. Notably:
– Production Stats: As of January 1, 2025, the field holds an estimated 33 million barrels of oil equivalent in proven and probable reserves.
– Production Capacity: The field has achieved a net production rate of approximately 25,500 barrels of oil equivalent per day (boepd) during the first half of 2025, marking it as the largest gas field on the UK Continental Shelf by production volume.
Financial Strategies for the Acquisition
Serica plans to finance this acquisition using interim cash flows derived from its newly acquired interest in Culzean, along with its existing financial resources, which include a robust $525 million Reserve Based Lending facility.
Serica’s Broader Portfolio
Serica Energy is an established independent oil and gas company with a diverse array of assets across the UKCS. Its operational focus includes:
– Primary Hubs:
– The Bruce, Keith, and Rhum fields in the Northern North Sea, which Serica operates.
– Various operated and non-operated fields tied to the Triton floating production storage and offloading unit.
– Additional Interests:
– Operated interests in the producing Columbus field in the Central North Sea.
– The Orlando field in the Northern North Sea.
– A non-operated interest in the Erskine field, also located in the Central North Sea.
Moreover, Serica recently entered into an agreement to acquire 100% of the issued share capital of Prax Upstream from Prax Exploration & Production, further bolstering its asset portfolio.
Conclusion
Serica Energy’s acquisition of BP’s interest in the Culzean field represents a strategic move that could significantly affect the company’s operational capabilities and financial standing. By adding a vital asset like Culzean, which boasts high production rates and a modern operational framework, Serica is positioned for considerable growth in the competitive landscape of the oil and gas industry. Consequently, this development not only underscores Serica’s commitment to expanding its resource base but also highlights the potential for increased production and revenue streams from one of the UK’s largest gas fields.