Serica Energy plc Update on BKR Transaction, US Sanctions and Rhum (7948O)
May 22 2018 - 6:43AM
UK Regulatory
TIDMSQZ
RNS Number : 7948O
Serica Energy plc
22 May 2018
Serica Energy plc ("Serica" or the "Company")
Update on BKR Transaction, US Sanctions, and Rhum Operations
London, 22 May 2018 - Serica provides an update following the
announcement on 8 May by the US Government of its withdrawal from
the Joint Comprehensive Plan of Action ("JCPOA") and the
reintroduction of wider US sanctions on Iran and certain
transactions with Iranian entities.
On 21 November 2017, Serica announced its agreement (the "BKR
Transaction") to purchase interests in the Bruce, Keith and Rhum
fields in the UK North Sea from BP. These fields together produce
up to 5% of the UK's indigenous gas production. Both BP and Serica
remain fully committed to completion of the transaction, which is
expected in the third quarter of 2018. Progress on the transition
arrangements, under which Serica will take over from BP as operator
of the fields on completion of the transaction, is on schedule.
The Iranian Oil Company (U.K.) Limited ("IOC"), a subsidiary of
the National Iranian Oil Company, has a 50% interest in the Rhum
field. As a result of the interest held by IOC, Rhum operations are
affected by US sanctions and, in particular, the new sanctions
regime announced by the US government on 8 May.
Certain services in support of Rhum field operations are
currently provided under authorisations obtained from the US Office
of Foreign Assets Control ("OFAC"). The current OFAC licence issued
to BP enabling the provision of goods, services and support by
certain US persons, expires on 30 September 2018. Applications have
been submitted to OFAC by BP and Serica for a renewed licence
beyond that date. Meetings are scheduled to take place with OFAC in
the next few weeks.
The US announcement on 8 May is expected to result in a change
of US policy in respect of the granting of OFAC licences. Serica is
working closely with BP and IOC to evaluate the potential impact of
the changes. This includes seeking appropriate dispensation from
the US authorities where possible and where required to ensure
ongoing safe and efficient operations. Serica is working closely
with and has support from the UK authorities on all aspects.
As part of the evaluation process, BP, as the current operator
of the Rhum field, has been reviewing operations scheduled to take
place during the transition period, prior to the implementation of
the new US sanctions. These include work to re-complete the Rhum R3
well, which was due to commence this week. To ensure that all
operations can be undertaken to the highest safety and
environmental standards during the interim sanctions period, BP has
decided to defer the commencement of work on R3 while the position
relating to US sanctions is being clarified.
Serica and BP are both committed to resolving the issue of US
sanctions as they apply to Rhum with a view to enabling a timely
completion of the BKR Transaction in the third quarter of 2018 and
safeguarding ongoing operations. The deferral of work on the R3
well, pending resolution of the sanctions position, is not expected
to impact the long-term recovery of Rhum reserves, nor the
completion of the BKR Transaction.
Mitch Flegg, Serica's Chief Executive, commented:
"As a British company working to maximise the full recovery of
Britain's gas reserves in line with OGA and UK Government policy,
we will be working with our partners and the UK Government to
identify measures, acceptable to the US authorities, to protect
safe and efficient Rhum operations and ensure maximum economic
recovery of reserves from this valuable UK resource. We are
receiving full support from all the relevant UK authorities in
these efforts.
All aspects of completing the BKR transaction remain on track:
an Aberdeen office has been identified; key staff are being
recruited by Serica; and the transition process of moving
operational staff and contracts from BP to Serica is well advanced.
All parties are working to see a successful completion".
Regulatory
This announcement is inside information for the purposes of
Article 7 of Regulation 596/2014.
Enquiries:
Serica Energy plc
Tony Craven Walker
Executive Chairman tony.cravenwalker@serica-energy.com +44 (0)20 7457 2020
Mitch Flegg
CEO mitch.flegg@serica-energy.com +44 (0)20 7457 2020
Peel Hunt
Richard Crichton richard.crichton@peelhunt.com +44 (0)20 7418 8900
Ross Allister ross.allister@peelhunt.com +44 (0)20 7418 8900
James Bavister james.bavister@peelhunt.com +44 (0)20 7418 8900
Instinctif
David Simonson david.simonson@instinctif.com +44 (0)20 7457 2020
Catherine Wickman catherine.wickman@instinctif.com +44 (0)20 7457 2020
George Yeomans george.yeomans@instinctif.com +44 (0)20 7457 2020
Notes to Editors.
1. On 21 November 2017, Serica (UK) Limited, a wholly-owned
subsidiary of the Company, signed a Sale and Purchase Agreement to
acquire BP's interests in the Bruce, Keith and Rhum fields in the
North Sea and associated infrastructure (the "BKR Transaction").
Under the Sale and Purchase Agreement, Serica will acquire a 36%
interest in Bruce, a 34.83% interest in Keith and a 50% interest in
Rhum (collectively the "BKR Assets").
2. A condition of completion of the BKR Transaction is the
issuing to Serica by the US Office of Foreign Assets Control
("OFAC"), an agency of the US Department of the Treasury, of a
licence ("OFAC Licence") authorising certain US persons to provide
goods, services and support to Rhum operations following
completion.
3. The Iranian Oil Company (U.K.) Limited ("IOC") has a 50%
interest in the Rhum gas field which is located in British waters.
IOC is a subsidiary of the National Iranian Oil Company and Rhum
operations are therefore affected by US sanctions.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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