Private equity-backed player Chrysaor has agreed to buy ConocoPhillips’ UK oil and gas business in a deal worth $2.675 billion.
As a result of this acquisition, Chrysaor will add three assets to its portfolio. These include two new operated hubs in the UK Central North Sea ‐ Britannia and J‐Block. It also includes the Clair Field area located in the highly prospective West of Shetlands region.
In the UK Southern North Sea, Chrysaor will assume responsibility for an ongoing decommissioning programme on ConocoPhillips UK’s end‐of‐life assets. This decommissioning programme is very well advanced and proceeding in accordance with ConocoPhillips’ plans. Chrysaor plans to have materially completed execution of this programme by 2022.
The deal is expected to finalise in late 2019, subject to regulatory approval.
Phil Kirk, chief executive, Chrysaor, said: “This significant acquisition reflects our continuing belief that the UK North Sea has material future potential for oil and gas production. Acquiring ConocoPhillips UK accelerates our strategy and further strengthens our position as one of the leading independent exploration and production companies in Europe.
"We see exciting growth opportunities in the North Sea and are looking forward to working with our new colleagues to safely sustain and deliver our value and growth targets,” Linda Z. Cook, Chairman of Chrysaor added.
“We are extremely proud of the legacy we’ve built in the UK over the last 50 years and are pleased that Chrysaor recognises the value of this business,” said Ryan Lance, chairman and chief executive officer. “This disposition is part of our ongoing effort to hone our portfolio and focus our investments across future low cost of supply opportunities.”
The deal increases Chrysaor’s pro forma 2018 production to 177,000 boepd, making Chrysaor one of the largest oil and gas producers in the UK North Sea.
Romana Adamcikova, senior analyst, North Sea upstream, Wood Mackenzie said: “This deal will make Chrysaor the top producer in the UK in 2019 and keep it among the UK's largest producers for the next few years. Considering the company was a relatively small producer before it acquired a batch of assets from Shell in 2017, this is a story of incredible growth.”
Adamcikova added: “ConocoPhillips is shifting its focus towards lower cost opportunities elsewhere in the world, particularly in the US. Among such a wider global portfolio, UK fields would have struggled to compete for capital. Chrysaor also gains a stronger presence in the West of Shetland with a stake in Clair. It already had an interest in the Schiehallion field. There is huge growth potential in the region and it wouldn't be a surprise to see Chrysaor make further moves in the near future, to bolster its mid- to long- term production outlook.”
Chrysaor is backed by Harbour Energy, a permanent capital energy investment company managed by EIG Global Energy Partners (EIG). Chrysaor said it will fund the deal from existing cash resources and an upsized $3 billion Reserve Based Lending debt facility underwritten by Bank of Montreal, BNP Paribas, DNB Bank, and ING Bank.