An associate of a Chinese investment bank has sunk $275million into a long term equity deal with a North Sea field development vessel.
Industrial and Commercial Bank of China, Ltd. (“ICBC”) is the largest commercial bank in the world in terms of total asset and net profit.
An agreement was closed yesterday between a nominee of the bank’s financial leasing subsidiary to become an equity partner in the BW Catcher floating production and storage offloading (FPSO) vessel.
The vessel is under a lease contract with Premier Oil for the development of the Catcher field in the North Sea.
FPSO owners BW Offshore Limited (BWO) has issued preference shares with a preferential dividend right to ICBCL, for an aggregate subscription price of $275million.
The equity investment in the BW Catcher FPSO is the first transaction under the cooperation agreement signed between the Norwegian shipowner and ICBCL in April this year.
The company plans to redeem the preference shares in full over an estimated term of 12 years.
The aggregate redemption and dividend payments on the preference shares are estimated to reflect approximately 25-30% of the estimated free cash flow after debt servicing in the Catcher contract over a similar term.
The net proceeds from the issue of the preference shares will be used for general corporate purposes.
“We are very pleased to secure this equity participation for the BW Catcher FPSO in cooperation with our strategic partner, ICBCL, and in line with our stated ambition to seek new ways of enabling further growth for the company”, said Carl K. Arnet, the chief executive of BWO.
“ICBCL is a world-leading financial institution and a strong partner. Together we can deliver cost effective solutions to our clients in the oil and gas sector.”
The BW Catcher arrived earlier this year in the UK North Sea.
It left the Keppel Shipyard in Singapore in August on its way to start the seven-year fixed-term contract with field.
Extension options mean the FPSO could potentially be in use on Catcher for 18 years.
BW Catcher was built in Japan and converted for use in the North Sea in Singapore.
It can process up to 60,000 barrels of oil a day and store 650,000 barrels. It has a design life of 20 years of uninterrupted operations. BW Offshore was awarded the front-end engineering study in 2012.
The Catcher development covers three fields – Catcher, Burgman and Varadero – 100 miles east of Aberdeen. The asset is thought to contain about 96million barrels of oil.
Premier has a 50% stake, alongside Cairn Energy and Mol Group, each with 20%, and Dyas (10%).
When fully complete the £1.3billion development will comprise 20 subsea wells which will be tied back to the FPSO.