Shares of Enquest Plc (LON: ENQ) plummeted 7.53% after the British oil and gas company announced that it has agreed to acquire 26.7% of Suncor Energy’s shareholding the North Sea project known as North Eagle.
Enquest has agreed to pay an initial sum of $325 million to Suncor for the deal that will see it acquire the Golden Eagle, Peregrine and Solitaire fields currently producing up to 18 million barrels per day.
The new oil fields could generate up to $100 million for the firm long-term at average oil prices of $50/bbl. Their low operating costs, which add up to $25 per barrel of oil, generate a decent margin for the company at current oil prices. Higher oil expected future oil prices will increase the deal’s profitability.
Equest will fund part of the acquisition using some of its tax losses making the deal very attractive. The firm will pay an additional sum of $50 million after the transaction is completed.
EnQuest Chief Executive, Amjad Bseisu, said:
“We are delighted we have agreed on the acquisition of a material interest in Golden Eagle, a high-quality, low-cost UK North Sea development. Upon completion, this acquisition will add immediate material production and cash flow to EnQuest and will allow us to accelerate the use of our substantial tax losses. It also demonstrates our continued commitment to the UK North Sea and diversifies our existing production base.”
Adding:
“The assets have a strong safety record and a lower than average CO2e emissions intensity ratio. We look forward to a productive partnership with the operator, CNOOC and our future joint venture partners, NEO Energy and ONE DYAS.”
Enquest share price.
Enquest shares plummeted 7.52% to trade at 12.78p having fallen from Wednesday’s closing price of 13.82p.