Verus Petroleum is pleased to announce the signing of a Sale & Purchase Agreement (SPA) for the acquisition of a 47% operated interest in the Babbage gas field from Premier Oil.
The consideration is £45.9 million with an economic date of 1 January 2018. This acquisition adds approximately 2,400 boepd to Verus’s daily production. The Babbage field is located in the Southern North Sea.
Verus will also acquire 50% operated interests in Licences P.2212, P.2290 and P.2301, adjacent to Babbage. Verus plan to drill a well in 2019 to prove additional gas volumes which could be tied back to Babbage some 10kms away.
The transaction will be funded by a combination of debt and existing cash. Verus’s existing lender Nedbank Limited supports the transaction and the existing Reserves Based Lending (RBL) facility will be increased and amended to allow for the participation of several additional banks who are also supportive of the transaction.
Commenting on the deal, Verus’s chief executive Alan Curran said:
“Verus is pleased to have signed this SPA with Premier Oil. This transaction builds upon our Boa acquisition last year, the drilling of two infill wells at Boa and our recently announced acquisition of an interest in the Alba field. The combined Alba and Babbage acquisitions increases our net production to more than 8,700 boepd and our reserves to nearly 24 MMboe. The transactions are consistent with the Verus strategy of expanding our production base and cash flow. Boa, Alba and Babbage are all long life assets with strong cash generation. As part of this transaction Verus intend to become the Babbage Operator which is a strategically important step for the company.”
The transaction is subject to the satisfaction or waiver of a number of conditions including pre-emption and operatorship rights of existing joint venture partners and regulatory approvals and is expected to complete in the fourth quarter of 2018.
Verus is focused on the creation of value through the acquisition of high quality production assets and, over time, through increased exposure to development projects.