EnQuest inks new $750 million debt facility to finance Golden Eagle deal

UK oil and gas company EnQuest has signed a new senior secured borrowing base debt facility for $750 million to enable refinancing and the acquisition of Golden Eagle area in the UK North Sea from Suncor.

In its statement on Friday, EnQuest said it has signed a new senior secured borrowing base debt facility of approximately $600 million and an additional amount of $150 million for letters of credit for up to seven years.

The new facility will enable the company to simplify its existing capital structure and finance the acquisition of a 26.69 per cent interest in the Golden Eagle assets.

EnQuest signed an agreement with Suncor Energy in February 2021 to buy its entire 26.69 per cent non-operated equity interest in the Golden Eagle area for an initial consideration of $325 million with additional contingent consideration of up to $50 million.

The completion of the transaction is subject to the satisfaction or waiver of various conditions precedent, including putting in place the funding arrangements.

According to EnQuest, the drawdown of the new facility is in two steps. The first step is refinancing existing debt, which allows the company to repay in full its existing senior financing agreement, the Sculptor capital facility and the outstanding BP vendor loan associated with the acquisition of the 75 per cent interest in Magnus.

The second step is financing the acquisition of the interest in the Golden Eagle Area Developmet.

Upon refinancing of the company’s existing high yield bonds, the maturity of the new facility is extended to the earlier of seven years from its signing date, or the point at which the remaining economic reserves for all borrowing base assets are projected to fall below 25 per cent of the initial economic reserves forecast.

In the event the maturity of the new facility is not extended, the amounts drawn down under steps 1 and 2 amortise such that they are fully repaid by June 2023.

Jonathan Swinney, EnQuest Chief Financial Officer, commented: on the new facility: “It enables the refinancing and simplification of our existing capital structure and the acquisition of the Golden Eagle assets which will add material value, production and reserves to EnQuest.

“I would like to thank our lead banks, BNP Paribas and DNB, together with all of the lenders, for their support and I look forward to working with them.”

The CNOOC International-operated Golden Eagle platform, located about 111 kilometres northeast of Aberdeen, produced first oil in October 2014.

The Golden Eagle area comprises the producing Golden Eagle, Peregrine, and Solitaire fields located in the UK North Sea. The area has significant remaining development potential, with anticipated field life extending into the early 2030s.