Business
Acquisition of additional interest in Kraken
Acquisition of additional interest in Kraken.
About this update from Enquest Plc
[{"type":"text","content":"\n \nRNS Number : 6973P EnQuest PLC 22 February 2016 \n\n \n \nENQUEST PLC, 22 February 2016. Acquisition of an additional 10.5% interest in the Kraken development from First Oil. \n\n\nEnQuest PLC ('EnQuest') announces the acquisition of an additional 10.5% interest in the Kraken development for nominal consideration. The acquisition from First Oil PLC ('First Oil') brings EnQuest's total interest to 70.5%. EnQuest and Cairn Energy PLC ('Cairn'), the other current participant in the Kraken development, are both taking up First Oil's interests pro-rata, in proportion to their holdings prior to the transaction. EnQuest has also waived its right to reclaim approximately $7 million of cash calls paid on behalf of First Oil in January and February 2016. EnQuest acquires the reserves and resources associated with the additional interest. In 2012, when EnQuest originally acquired its Kraken assets from First Oil, part of the consideration was in the form of a contingent development carry, based on the determination of the level of reserves. This contingent carry provision now ceases to be effective. Further, EnQuest is not reimbursing First Oil in respect of costs incurred by First Oil to date.\n \nFurther information\n \nIn December 2015, in its Operations Update, EnQuest highlighted that the Kraken development project was on schedule for first oil production in H1 2017 and that full cycle gross project costs had been reduced by c.10%. The additional Kraken net capex to EnQuest is anticipated to be approximately $90 million to first production. In December 2015, EnQuest issued a 2016 cash capex guidance range of $700 million to $750 million. Since then further additional reductions have been made. Consequently EnQuest expects to absorb the capex resulting from today's transaction without any net increase in its previous 2016 guidance range. Further details will be included in EnQuest's 2015 full year results announcement, on 17 March.\n \nEnQuest expects that the additional reserves it is acquiring through this transaction will incrementally increase the amount available to it under its bank facility to $1.2billion (from $1,137 million as reported in August 2015).\n \nIn its most recent annual report, for 2014, EnQue...