Serica Energy plc announced the signing of an agreement to acquire the entirety of BP’s stake in the P111 and P2544 licences (‘the Proposed Acquisition’), located in the UK Central North Sea. Completion is subject inter alia to the waiver of applicable pre-emption rights.

The Proposed Acquisition comprises a 32% non-operated working interest in the P111 licence, containing the Culzean gas condensate field (‘Culzean’), and P2544, an exploration licence adjacent to the P111 licence. The Culzean field, operated by TotalEnergies, is currently the largest single producing gas field in the UK North Sea. As per the terms of the joint operating agreement between the Culzean field partners, the Proposed Acquisition announced today is subject to a pre-emption period which runs for 30 days, with each of the Culzean field partners (TotalEnergies, 49.99%, and NEO NEXT, 18.01%) having the option to acquire BP’s stake in the licences on the same terms as those agreed by Serica. The Company will update the market further as and when appropriate.

Chris Cox, Serica’s CEO, stated:

“Should this transaction complete, it would deliver a step-change for Serica, adding material production and cash flows from the largest producing gas field in the UK. Culzean is a world-class asset, delivering gas from a modern platform with exceptionally high uptime and low emissions.”

KEY TERMS OF THE PROPOSED ACQUISITION

The Proposed Acquisition has an economic date of 1 September 2025 and an upfront cash consideration of $232 million, subject to customary working capital adjustments and partially offset by the receipt of a payment reflecting interim post-tax cashflows between the economic date of the transaction and the completion date, expected around the end of 2025.

The terms of the Proposed Acquisition also include provision for two further cash payments contingent on: (1) successful results and production from a large exploration opportunity on the P2544 licence; and (2) changes to the UK ring-fence fiscal regime. Further details of the Proposed Acquisition transaction terms will be provided following the expiry of the pre-emption period.

The Company can fund the consideration through a combination of interim cashflows from the Culzean interest and existing financial resources (including cash and undrawn amounts under the existing $525 million Reserve Based Lending facility). The Company is however also considering putting in place a new acquisition facility, which would be refinanced in due course via increased debt facilities to reflect the Company’s larger, more diversified and cash generative asset base inclusive of the Prax and Culzean acquisitions, which the Company estimates would support a larger borrowing base.