Sells 15% interest in Gina Krog Field to Sequa Preoleum for NOK1.4B
announce that its subsidiary Tellus Petroleum AS ("Tellus") has entered into an agreement with Total E&P Norge AS to purchase interests of 30% in PL 029C, 14.78% in PL 029C and 21.8% in PL 048, representing 15% in the Gina Krog unit on the Norwegian Continental Shelf. The effective date of the transaction is 1st January 2015 and the transaction is subject to normal consent by the Norwegian Authorities. The transaction is planned to be funded through a combination of debt and equity, with completion planned for the end of 2015 contemporaneously with the completion of the Wintershall portfolio transaction, as announced on 18th June 2015.
The proven and probable (2P) reserves in the transaction is some 33 mill. boe net to Tellus as per the official Norwegian Petroleum Directorate data. The field is operated by Statoil (58.7%) and partners are Total (30%), PGNiG (8%) and Det norske (3.3%). The production is expected to commence in mid-2017 ramping up to a plateau of some 10,000 boed net to Tellus. The Plan for Development and Operation ("PDO") was approved in June 2013 and gross capex on Gina Krog is some NOK 32 billion.
In the transaction, it is agreed that Tellus will pay a completion payment of ca NOK 1.4 billion pre-tax based on the latest operator project cost estimates for Total's share in 2015. The seller will retain the tax balances related to the Gina Krog investments prior to the effective date. On signing, Tellus paid a deposit of NOK 50 million to Total. On this basis for the Sequa Petroleum group, the all-in costs until first production for Gina Krog will be 11 USD/boe pre-tax.
This transaction is a positive addition to the portfolio purchase agreement with Wintershall, announced in June. Gina Krog provides the company with a further high quality asset in our core North Sea area, with a production start date between Ivar Aasen and Maria. Once in production, the field will provide cash-flow that will enable further company growth. The deal delivers on Sequa and Tellus's strategy of rapid growth through acquiring high quality material assets that are in production or being moved through development into production.