In the midst of restructuring in the region, Scottish energy giant SSE has agreed to sell its North Sea gas company to the acquisition-hungry Viaro Energy for £ 120 million.
The deal would allow London-based Viaro, including the giant Laggan Tormore project west of Shetland, to acquire stakes in a number of major North Sea properties.
Thus, SSE will complete its long awaited exit from the exploration and development industry of the North Sea.
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In the midst of the coronavirus crisis, oil and gas prices slumped this year, leading corporations to slash North Sea investment and put properties up for sale.
Privately owned Viaro, however, seems to have agreed that now is a good time for the North Sea to acquire properties.
In July, Viaro entered the North Sea market, led by Italian entrepreneur Francesco Mazzagatti, by acquiring RockRose Energy for about £ 250 million.
The purchase of £ 250 million is a major vote of confidence in the North Sea.
On completion of the deal, the company would only have to make an initial payment of £25 million in cash to SSE, with the balance of the purchase price due within three years.
Viaro will have to pay an extra £ 40 million if next year the gas price exceeds negotiated thresholds; and more if the Greater Laggan Region Glendronach project comes on line.
“This sale clearly comes at a difficult time for the E&P sector and the wider economy, but we believe it is the right move for our shareholders as we focus our resources on our core low carbon businesses.”
SSE acquired a 20 percent stake in the Greater Laggan area from Total in 2015 for about £670 million. The business then contributed to the expense of putting the findings of Laggan-Tormore into development in 2016.
In June, SSE reported that after oil prices slumped because of the corona virus, it had reduced the value of its North Sea gas production sector by £ 291 million.
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Yesterday, the company said it currently expects to make a small profit on the sale to Viaro of its properties. It has, however, agreed to uphold a promise to pay 60% of the decommissioning costs associated with the plants purchased by Viaro.
Mr. Mazzagatti said the deal reflects Viaro’s devotion to development and to the U.K. Continental Shelf as a province of hydrocarbons.
“We are actively pursuing other opportunities.”We actively explore other possibilities.