Ineos’s planned acquisition of ConocoPhillips’s UK North Sea portfolio would make it the fifth biggest producer in the basin, an analyst has said.
Ineos, backed by Britain’s richest man, Jim Ratcliffe, confirmed on Sunday that it was in talks with ConocoPhillips for the package, which includes a stake in the giant Clair field, west of Shetland.
Daniel Rogers,upstream oil an gas analyst at GlobalData, said the deal could be worth about £1.8 billion ($2.4bn).
Mr Rogers said the addition of ConocoPhillips’s assets would lift Ineos’s 2019 production from 32,000 barrels of oil equivalent (boe) per day to more than 95,000 boe.
It would also increase Ineos’s remaining UK reserves to 420 million boe.
A portfolio that size would put the company just behind Chrysaor, which bought stakes in 10 UK North Sea fields from Shell for £3bn last year.
Mr Rogers said: “The sale of its UK assets would mean a total company production loss of 6% or over 75,000 boe per day for ConocoPhillips.
“The deal will provide Ineos AG with oil producing assets to shift it’s heavily gas weighted portfolio – currently 20% oil – to a 30% oil weightage.
“ConocoPhillips’s divestment does not come as a surprise as speculation of the sale of its UK assets has been present for a number of years.
“Along with Chevron Corporation and Marathon Oil are a number of US companies looking to divest from the UK upstream sector, likely in an attempt free up capital for competing operations globally.
“An acquisition of ConocoPhillips’s full UK upstream portfolio includes stakes in 30 currently producing fields, 26 of them being gas fields and four oil-producing fields.
The majority of the deal value is from ConocoPhillips remaining share in Clair and two other producing fields, Britannia and Brodgar.
“The deal may also include eight discovered fields that are awaiting development,” Mr Rogers said.
“ConocoPhillips’s UK assets (post Clair field farm down to 7.5%) are estimated to increase the Net Present Value of Ineos’s upstream portfolio by around $2.4bn, giving a Net Present Value of roughly $4bn of both combined assets.”