Yahoo Finance Serica heads deeper into North Sea with $20m Total deal
North Sea oil producer Serica Energy will deepen its interest in two of the North Sea’s most important oil and gas assets in a deal to buy holdings from French major Total.
The $20m (£15.4m) acquisition of Total’s stakes in the Bruce and Keith oil assets has emerged as Serica battled to push through a separate plan to buy BP’s stakes in the same fields, which has been mired by US sanctions due to another asset in the deal being partly owned by an Iranian company.
Under the fresh deal, Serica will acquire a 42.25pc interest in the Bruce field and a 25pc interest in the Keith field and its infrastructure for $5m upfront, followed by a further three $5m payments.
However, the 11 million barrel boost depends on Serica’s sanction-hit deal with BP moving ahead.
Serica agreed to buy a package of BP assets worth $300m including stakes in the Bruce, Keith and Rhum fields which together make up around 5pc of the country’s oil production.
The Rhum field has since emerged as a key stumbling block following the announcement of US sanctions against Iran because the field is half-owned by Iran’s state-backed oil company.
The trio of oil companies is locked in negotiations with US authorities to agree a deal which would allow the acquisition to move ahead despite the US crackdown on Iran following the collapse of the nuclear deal earlier this year.
Mitch Flegg, Serica’s chief executive, said: “We’re not underestimating the scale of the challenge but things are moving forward.”
He said that he has been “surprised” by the “huge” amount of cross-Government support given to the negotiations.
The Oil and Gas Authority and the Department for Business, Energy and Industrial Strategy have been joined by officials from the Treasury and the UK embassy in Washington DC to help in negotiations with the US authorities.
“Everyone has been very clear that this is important for UK plc,” he added.
Serica has been on the hunt for acquisitions in the North Sea since oil prices began to lift from their nadir in early 2016.
"A couple of years ago this would have been huge news for Serica but this [deal] is business as usual now,” said Mr Flegg.
“We’ve always said didn’t want to stop at the BP deal and we continue to look for opportunities. This just arrived slightly quicker than we expected,” he added.
