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Updated: Chrysaor to buy ConocoPhillips’ North Sea assets in £2bn deal

The Britannia platform
Chrysaor's Britannia platform. Projects such as Talbot and Zennor's Finlaggan development have been delayed.

Chrysaor has agreed to buy US operator ConocoPhillips’ North Sea assets in a £2billion deal.

The firm said the acquisition makes Chrysaor the largest net producer in the UK. In the last two years, it has also snapped up packages of North Sea assets from Shell and Spirit Energy.

The ConocoPhillips transaction adds three new “material” assets to Chrysaor’s portfolio  – the Greater Britannia Area and J-Area in the Central North Sea and a 7.5% stake in the BP-operated Clair field, West of Shetland.

The deal is expected to be completed in late 2019 and boosts Chrysaor’s daily production to 177,000 barrels of oil equivalent. This is expected to increase even further to more than 185,000 this year through new drilling and development programmes.

It also includes stakes in a host of other non-operated assets in the East Irish Sea, Shell’s Galleon field and Premier Oil’s Nicol field and infrastructure including the Brent pipeline and Sullom Voe gas terminal.

Chrysaor said it will be “joined by a highly-competent workforce from ConocoPhillips UK”, although it is not yet clear how many jobs will transfer over.

A spokesman for the firm said a workforce consultation get underway upon completion of the deal towards the end of the year and the number will be decided at a later date.

At present ConocoPhillips employs 688 staff in the UK and 400 contractors.

The US firm will retain its London-based commercial trading business and its interests in the Teesside oil terminal, which it operates.

Chrysaor will take on decommissioning responsibility for Conoco’s Southern North Sea end-of-life assets.

The full list of assets covered in the deal.

The private equity-backed firm will fund the deal through existing cash resources and a £2.5billion debt facility underwritten by several banks – Bank of Montreal, BNP Paribas, DNB Bank and ING Bank.

Chief executive Phil Kirk said: “This significant acquisition reflects our continuing belief that the UK North Sea has material future potential for oil and gas production.

“Acquiring ConocoPhillips UK accelerates our strategy and further strengthens our position as one of the leading independent exploration and production companies in Europe.

“In the Central North Sea, we will own a range of operated hub infrastructure providing access points in an area with the largest undeveloped contingent and prospective oil and gas resource base in the UK.

“In the West of Shetlands region, we have secured long life cashflows from two world-class fields operated by BP.

“Chrysaor’s West of Shetlands position also provides exposure to a developing region with significant interest and momentum from major oil companies.

“We will seek to build on that through the acquisition of additional interests and acreage.”

The deal effectively brings to an end ConocoPhillips’  exploration presence in the North Sea, which has lasted 50 years.

Conoco CEO Ryan Lance: “We are extremely proud of the legacy we’ve built in the U.K. over the last 50 years and are pleased that Chrysaor recognises the value of this business.

“This disposition is part of our ongoing effort to hone our portfolio and focus our investments across future low cost of supply opportunities.”

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