ConocoPhillips Sells UK North Sea Assets To Chrysaor In US$2.6 Billion Deal

Oil and Gas Industry
Oil platforms and transport vessels in operation (Photo: Reuters)

Houston-based energy firm ConocoPhillips has just announced that it will be halting its exploration and production activities in the North Sea as part of a US$2.6 billion deal it has struck with Chrysaor. The private-equity backed firm has apparently bought all of ConocoPhillips' assets in the British North Sea oil fields, essentially making it the basin's largest producer of oil and gas.

When all of the assets are transferred, it would boost Chrysaor's overall production by as much as 177,000 per day. This would be a massive jump from its current production numbers of only 72,000 barrels. Both companies are reportedly still ironing out some details, but the deal is expected to be completed by the second half of the year. The deal will also need to undergo regulatory approval before it can be finalized.

ConocoPhillips will still continue with its commercial trading business based in London and as part of the deal, it will hold a 40.25 percent interest in the Teesside oil terminal. Meanwhile, Chrysaor will take complete control of two operational hubs, namely the J-Block and Britannia hubs located in the Central North Sea near the UK.

The deal will also give Chrysaor rights to ConocoPhillips' interest in the Clair Field area just west of Shetland. The company's potential gas and oil reserves in its various interests are estimated to yield more than 280 million barrels. Additionally, Chrysaor will assume responsibility of the American firm's end-of-life assets and ongoing decommissioning programs.  

According to its documents, Chrysaor will be funding the acquisition from loans provided by institutions such as the Bank of Montreal, ING Bank, DNB Bank, and BNP Paribas. The company's CEO Phil Kirk recently announced that the massive acquisition is a reflection of the company's confidence in the North Sea's potential, which should provide the company with a rich source for the years to come. Kirk added that the deal should also strengthen the company's position as the leading exploration and production firm in Europe.

In 2017, Chrysaor also purchased a comprehensive package from Royal Dutch Shell for its oil and gas assets in the North Sea. The deal reportedly cost the company around US$3.8 billion. After the deal, the company backed by private equity firm EIG Global Partners became a major player in the North Sea.

Aside from ConocoPhillips, Chevron is reportedly also in the processes of selling off its UK North Sea Assets. Chevron currently produces around 75,000 barrels per day in the region. The company explained that the acquisitions should yield a significant positive cash flow as it will drastically lower operational costs moving forward.

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