Ithaca Energy, a Canadian oil and gas explorer focused on the UK North Sea, has agreed a deal to sell 25.25% of all its assets to Dyas UK for £40million in cash.
Dyas – a wholly owned subsidiary of SHV, the largest privately owned conglomerate in the Netherlands – will also provide a loan to Ithaca to allow it to redeem in full borrowings of about £37million it has with the Royal Bank of Scotland.
Ithaca said yesterday that the deal would provide it with the resources to complete the leasing of the Beatrice oil field from Talisman Energy, restore production from Beatrice Bravo and complete the development of its Jacky discovery.
It said these assets were expected to give it, in the first quarter of 2009, aggregate production of up to 7,500 barrels of oil per day (bpd) and it would also have resources to provide funding for additional projects.
Dyas, which already has production of 24,000 barrels of oil equivalent per day, and Ithaca will acquire a lease for a 100% interest in Beatrice from Talisman for a minimum of three years, extendable at Ithaca’s election for the duration of production, for £10million.
This is to be paid following the start of production from Jacky, which lies immediately to the north of Beatrice in the inner Moray Firth. Beatrice produces around 2,000bpd from one platform.
A second platform, Beatrice Bravo, is shut-in but Ithaca intends to restore production by connecting it to a pipeline to be constructed to Jacky. Bravo was producing about 800bpd when it was shut in.
Ithaca said the new loan provided by Dyas would be for an initial two years, after which Dyas would have the option to convert it to acquire an additional 15.15% of Ithaca’s current interest in the same properties.
It said that, should the option be exercised, the total aggregate consideration for the deal would be about £77million.
The assets to be sold also include stakes in Ithaca’s Athena oil discovery and Stella gas and condensate find.
As part of the deal Dyas managing director Alexander Berger will join Ithaca’s board. Ithaca chief executive Lawrie Payne said: “The transaction is consistent with our philosophy of establishing high initial interests in projects from which to obtain financial leverage by farming out and/or selling down at various stages of development.”