Rex’s Lime splashes millions on OKEA’s stake in Repsol’s North Sea oil field

Thanks to a deal with OKEA, which is pursuing an exit strategy from non-core assets to direct its resources toward core ones, Lime Petroleum, a Norwegian subsidiary of Singapore’s Rex International, is expanding its interest in an oil field operated by Repsol Norge, a subsidiary of Spain’s Repsol, in the North Sea off the coast of Norway. The field was on a 20-year hiatus after production ground to a halt in 2001 before being put back into operation nearly three years ago.

The first oil at the Yme field was achieved in October 2021, twenty years after the field was last on stream and months after the Norwegian Petroleum Directorate (NPD) granted Repsol consent for the oil production start-up in August 2021, which followed a revised plan for development and operation (PDO), sent to the Norwegian Ministry of Petroleum and Energy in December 2017, and approved in March 2018.

Following Lime Petroleum’s sale and purchase agreement with Kufpec Norway in August 2022 for the acquisition of a 10% interest in the Yme field for a post-tax consideration of $68 million, the completion was concluded in December 2022. The agreement for OKEA’s 15% interest has enabled Rex’s Norwegian subsidiary to raise its stake in the producing Yme field to 25% for a post-tax consideration of $15.65 million.

While all related decommissioning costs will be transferred to Lime, the company will pay OKEA a post-tax consideration of $9.2 million in 2027, which will be repaid to the former in four 25% tranches upon completion of four pre-defined stages of abandonment at the field. The transaction, effective from January 1, 2024, is expected to be completed by the end of the year. As it will be financed through cash at hand, Lime claims that no further financing is needed to complete the acquisition.

Svein J. Liknes, OKEA’s CEO, highlighted: “Following several years as a partner in the Yme licence, we have decided to exit a non-core area with a relatively small holding. The divestment allows OKEA to focus financial and human resources in our core areas, and we are pleased to announce this transaction with Lime Petroleum to the mutual benefit of both parties.”

Located in production licenses PL 316 and PL 316B on the Norwegian Continental Shelf (NCS), the Yme field lies in the southeastern part of the Norwegian sector of the North Sea, 130 kilometers northeast of the Ula field in the water depth of 100 meters.

Encompassing two separate main structures, Gamma and Beta, which are 12 kilometers apart, the field’s reservoirs are in sandstone of the Middle Jurassic age in the Sandnes Formation, at a depth of 3,150 meters. Originally discovered in 1987, the production at Yme did not start until 1996.

After production ceased in 2001 since the field’s operation was no longer regarded as profitable, Yme was redeveloped and put into production in 2021. As a result, the field is producing between gross 20,000 and 25,000 boepd, following the completion of the drilling of development wells in the second quarter of 2024.

The new development project entailed the engineering, procurement, and installation of a new wellhead module on top of the existing facilities, the modifications and upgrading of the Maersk Inspirer mobile offshore drilling and production unit before installation in the field, and subsequent hook-up to existing wells and installations on the seabed offshore.

Before its merger with Noble Corporation became effective in 2022, Maersk Drilling decided to sell its Maersk Inspirer jack-up rig to Havila, which would, in turn, lease and sell the rig to the Yme field license, operated by Repsol, for a price tag of $373 million. As a result, Repsol took over the day-to-day operations of the Yme Inspirer jack-up rig on behalf of the Yme license.

The acquisition of OKEA’s stake will boost Lime’s daily net production by approximately 3,500 boepd in 2024. Since AGR Energy Services’ report, dated March 13, 2024, attributed 39.47 million barrels of 2P reserves to the Yme field as of December 31, 2023, the increased stake will add 5.9 million barrels net to Lime as of the effective date of the acquisition.

Lars B. Hübert, CEO of Lime, commented: “The Yme field has been on a good trajectory since Lime entered in 2022 and we are pleased to increase our stake, in line with our strategy to increase our reserves and resources base. We have a great relationship with the operator, Repsol, and are working closely with them to find additional value in Yme. We expect this latest acquisition to add to Lime’s cash flow in the coming years.”

The closing of the acquisition is conditional upon Norwegian governmental approval and is expected to be completed before year-end 2024. The current list of the Yme field’s license partners includes Repsol Norge (55%, operator), PGNiG Upstream Norway  (20%), Lime (10%), and OKEA (15% ). Following the wrap-up of the acquisition, OKEA will exit the license and Lime will hold a 25% stake.