Norwegian firm broadens its North Sea horizons with stake in Shell’s UK gas field

DNO Exploration UK Limited, a wholly owned subsidiary of Norway’s oil and gas player DNO, has put the wheels into motion to expand its North Sea portfolio by acquiring an interest in a Shell-operated gas field located on the UK Continental Shelf (UKCS).

Thanks to an agreement with ONE-Dyas E&P Limited, DNO will get its hands on a 25% interest in the Arran field, which started production in 2021 as a subsea tie-back to the Shearwater A platform. Both the field and the platform are operated by Shell. While gas from Arran is exported via the Fulmar Gas line to the St. Fergus Terminal, liquids are exported to Cruden Bay via the Forties Pipeline System.

Chris Spencer, DNO’s Managing Director, commented: “Arran fits neatly in our strategy of acquiring bolt-on producing assets as we develop our significant discoveries in Norway. The company expects financial synergies between Arran and DNO’s existing position in the UK.”

The Norwegian player will close this transaction by paying a cash consideration of $70 million plus a contingent consideration of up to $5 million if certain operational targets are met. The effective date of the transaction is set to be January 1, 2024.

According to DNO, this acquisition will add some 4 million barrels of oil equivalent net to the company, of which 90% will be gas, with projected net 2024 production of 2,000-2,500 barrels of oil equivalent per day (boepd). The transaction is expected to be completed in 2Q 2024, subject to authorities’ approval.

Located in 22/30b in the Central North Sea, approximately 225 km (140 miles) East of Aberdeen, in a water depth of 295 ft (90 m), Shearwater is a normally manned integrated process, utilities, and quarters (PUQ) platform, which is bridge linked to a wellhead (WH) platform.

The acquisition enables DNO to continue to enlarge its North Sea portfolio, which currently includes 14,200 boepd of production almost exclusively from fields in Norway. This will grow as ongoing development projects notably, Trym restart (50% and operator), Andvare (32%), and Berling (30%) are brought onstream.

The Norwegian player’s 2023 exploration program delivered four additional discoveries and two successful appraisal wells in Norway.

While revealing a play-opening gas condensate discovery in 2023, DNO underlined that the preliminary evaluation of the discovery indicated gross recoverable resources in the range of 25-130 million barrels of oil equivalent (mmboe) on a P90-P10 basis.