Ian Suttie’s First Oil Expro has agreed a £32million deal to buy the UK assets of troubled North Sea firm Antrim Energy.
The multimillionaire businessman has moved in after the costs of developing the Causeway field finally became too much for the Canadian explorer.
First will pay £32.3million in cash, plus take on financial liabilities for Antrim’s UK subsidiary.
Antrim had stakes in the Causeway Area project and the Cormorant East field, along with exploration licences in the Kerloch and Typhoon prospects.
It will retain its interest in the Fyne and Erne licences, along with a licence in Ireland’s Porcupine basement, if the deal, which remains subject to shareholder approval, goes through.
The deal has been backed by the Antrim board.
“The board of directors of Antrim, after consultation with its financial and legal advisers, has unanimously approved entering into the agreement and will recommend that Antrim shareholders approve the transaction at a special meeting of shareholders to be convened and held for the purpose of approving the transaction,” a spokesman for the company said.
Antrim’s share price plunged last August after it admitted it had significant doubts that it could continue trading.
Weeks later it announced it was looking at selling off its stake in Causeway as mounting costs on the field – where it held a 35.5% stake after farm-out deals to Ithaca – along with a shutdown of the North Cormorant platform last September left the company facing the possibility of breaching debt covenants.
It looked to have been given a lifeline for its operations after agreeing a deal to amend its payment and oil commodity swap with Credit Suisse (CS), but production on the field had declined to around 3,000 due to ongoing technical problems.
The firm added yesterday: “The board of directors’ recommendation (to sell) follows an extensive process by the company to secure additional viable financing needed to meet higher-than-expected capital costs to complete the Causeway development, as well as meet its ongoing payment and oil swap obligations with CS.
“This process was hindered by production interruptions caused by platform shutdowns and ongoing delays in completion of the Causeway electric submersible pump (ESP) and water injection facilities. These delays further negatively impacted available cash balances as hedged production volumes under the oil swap no longer matched actual production volumes.
“While ESP and water injection facilities are now expected to be operational by early Q2 2014, the operator has incurred further costs at Causeway and the company has ongoing debt financing and oil swap obligations which, if not funded, could have resulted in the loss of the asset.”
The new sell-off, Antrim said, would give the Canadian firm about £18million in working capital and no debt.
First Oil Expro already has stakes in a number of North Sea fields, including the Cormorant East field near Causeway.