BP, Serica announce $397 million deal in North Sea

British oil major BP announced Tuesday it’s selling a package of its interests in the Bruce assets in the North Sea to London-based Serica Energy for a total of £300 million ($397.3 million), Kallanish Energy reports.

The deal, expected to close in the third quarter of 2018, includes stakes in the Bruce (36% stake), Keith (34.84%) and Rhum (50%) fields, three bridge-linked platforms and associated subsea infrastructure. These fields are developed in partnerships with Total, BHP Billiton, Marubeni and the Iranian Oil Company UK.

Serica will make staged payments to BP depending on the operational and financial performance of the assets in future years. It will pay BP some £12.8 million upfront, a share of cash flows over the next four years, a consideration equivalent to 30% of BP’s post-tax decommissioning costs and several contingent payments dependent on future asset performance and product prices.

“This is an example of BP’s Upstream strategy in action – refreshing our portfolio and focusing our activity on assets which will add most value over the long-term,” said Bernard Looney, BP CEO, Upstream. “We remain committed to the North Sea and continue to invest.”

The oil major expects to double its North Sea production to around 200,000 barrels of oil-equivalent per day (BOE/d) thanks to new projects such as the Quad 204 and Clair Ridge. The Quad 4 redevelopment west of Shetland came online this year, as the third of seven global major BP start-ups. Clair Ridge is expected to begin production next year.

BP will still be financially liable for decommissioning the Bruce assets put planning and execution will be undertaken by Serica. Some 110 staff who operate and support the assets will be transferred to the buyer.

“This transaction will establish Serica as a leading British independent oil company with the scale, balance sheet and operating capability to prosper in the North Sea’s rapidly changing upstream oil and gas industry,” added Serica chairman Tony Craven Walker.

There has recently been a number of deals in the mature oil and gas fields of the UK North Sea, with new entrants and portfolio re-focus from majors. BP said it’s investing heavily in the reliability and integrity of its existing North Sea assets through an extensive renewal program. In 2016. It invested $1 billion in the ETAP cluster of fields which is expected to extend field life until at least 2035.