Serica meets conditions for Rhum field sanctions waiver, buys more stake in Bruce and Keith

Serica Energy and BP have satisfied conditions of the license relating to the UK North Sea Rhum field issued by the U.S. Office of Foreign Assets Control (OFAC) regarding the interest in the field held by the Iranian Oil Company (UK) Limited (IOC). Serica has also signed an agreement to buy further interests in the Bruce and Keith fields.

To remind, the completion of the deal between BP and Serica whereby Serica would acquire BP’s interest in the Bruce, Keith, and Rhum fields has experienced delays because of IOC’s participation in the Rhum field, making the field potentially “vulnerable” to the new sanctions regime against Iran announced by the U.S. government on May 8.

Following delays, BP and Serica  in October received a conditional license and assurance from the U.S. OFAC relating to the Rhum field, which enabled BP and Serica to move forward with the deal.

Announcing the satisfaction of OFAC License conditions on Monday, Serica said that these arrangements provide that all benefits accruing from and relating to IOC’s interest in the Rhum field will be held in escrow for such period as U.S. sanctions apply and ensure that neither IOC nor any direct or indirect parent company of IOC will derive any economic benefit from the Rhum field during that period.

IOC will also exercise no decision-making powers in respect of Rhum during the same period. The arrangements enable third party service providers to continue to provide services unhindered and production from the Rhum field to continue uninterrupted. The completion of these arrangements fulfills a condition precedent of the sale and purchase agreement announced in November 2017 under which Serica UK will acquire BP’s interests in the Bruce, Keith and Rhum fields.

Mitch Flegg, Chief Executive of Serica Energy, commented: “Completion of the arrangements required under the OFAC License is an important step in the efforts which all interested parties have been making to ensure that the contribution these fields make to UK energy supply is safeguarded and the value of the reserves assured.”

Buying more interest in Bruce & Keith 

Serica has also announced the signature of sale and purchase agreement with BHP Billiton to acquire further interests in the Bruce and Keith fields.

Under the agreement with BHP, Serica will acquire a 16% interest in the Bruce field and a 31.83% interest in the Keith field and associated infrastructure. The initial cash consideration is £1 million, to be adjusted for working capital and 40% of post-tax cashflows from the effective date of January 1, 2018. The net 2P Reserves attributable to the BHP Assets are estimated to amount to approximately 4.0mmboe.

All three transactions are expected to complete on November 30, 2018. Following completion of these transactions Serica UK will hold 50% of the Rhum field, 94.25% of the Bruce field and 91.67% of the Keith field and will become operator of the fields.

Flegg also said: “This acquisition, in addition to the previously announced transactions with BP and Total, place us in an even better position to unlock increased value from the assets and benefit from economies of scale.”

Offshore Energy Today Staff