Oil and Gas World

The CNOOC International-operated Golden Eagle platform, located about 111 kilometres northeast of Aberdeen, produced first oil in October 2014. This major milestone was accomplished under budget, ahead of schedule, and with a world-class safety record.

CNOOC International is planning for a long, successful and safe operating life at Golden Eagle, which is also expected to act as a future hub for tieback opportunities. A good example of this hub strategy at work is the Solitaire field, which was discovered in 2001 and acquired by CNOOC International and our Golden Eagle co-venture partners in 2010. Located four kilometres northeast of Golden Eagle, Solitaire was a stranded discovery and not large enough to be developed on its own. By creating a tieback to Golden Eagle infrastructure, Solitaire came on stream with first production in December 2015.

CNOOC Petroleum Europe Limited, a wholly-owned subsidiary of CNOOC Limited, is the operating partner of Golden Eagle (36.54%), with Suncor Energy UK Limited (26.69%), NEO Energy Production UK Limited (31.56%) and ONE-Dyas UK Limited (5.21%) also holding interests in the field and its facilities.

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

• 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

• Significant remaining development potential, with anticipated field life extending into the early 2030’s:

-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

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.