Financial Times: Tullow buys two North Sea gas fields: “Tullow Oil has taken its spending this year to more than $1bn (£514m) with the £200m cash purchase of two North Sea gas fields from Royal Dutch/Shell and ExxonMobil.” (ShellNews.net) 21 Dec 04
By James Boxell
Published: December 21 2004
Tullow Oil has taken its spending this year to more than $1bn (£514m) with the £200m cash purchase of two North Sea gas fields from Royal Dutch/Shell and ExxonMobil.
The acquisitive Irish energy group said the transactions would help it take advantage of rising gas prices in the UK.
The purchase of the Schooner and Ketch fields is the latest example of big international oil groups disposing of non-core North Sea assets.
Aidan Heavey, Tullow chief executive, said he would spend £140m in the next three years to double gas production from the fields. "It is really down to what you throw at it investment wise," he said. "This will be a material asset for us, but isn't for Shell and Exxon, who don't own the local pipeline infrastructure and are isolated."
Mr Heavey said Shell and Exxon had recovered 23 per cent of the 1,500bn cu ft of gas from the fields, and the usual level for a gas basin was 50 per cent.
The Schooner and Ketch fields are part of the Caister-Murdoch System, a pipeline infrastructure in the southern area of the North Sea. Tullow already owns stakes in several fields in the Caister-Murdoch area, and a share of the pipeline system.
The company is paying about $7.60 per barrel of oil equivalent for the fields, depending on recovery rates, which Mr Heavey said compared favourably with a similar acquisition from BP four years ago. He said Tullow, which paid £317m for Energy Africa and its west African assets in May, was pursuing "aggressively" other North Sea gas deals.
Tullow's shares rose 3.8 per cent to 150p yesterday.
* Separately, Shell has extended by 32 years a production deal with the Oman government, which was due to expire in 2012. Oman is Shell's fourth-biggest oil producing region after the US, Nigeria and the UK, and accounts for about 269,000 barrels a day of its global production.