Chrysaor Buys Conoco

Chrysaor buys Conoco.
   

Chrysaor Holdings buys ConocoPhillips’ oil and gas assets in the British North Sea for $2.68 billion.
   
This adds resources in the J-Area field, Britannia field, and East Irish Sea to Chrysaor’s operating portfolio.  It also brings in a 7.5% non-operated stake in BP’s Clair field, west of the Shetland Islands, adding to Chrysaor’s 10% stake in Schiehallion in the same region.

   

Other non-operated interests and infrastructure such as the Brent pipeline will also transfer.  Conoco keeps its London-based commercial trading business and its interests in the Teesside oil terminal, which it operates.

   

Ryan Lance of ConocoPhillips said: ‘We are proud of the legacy we’ve built in the UK over the last 50 years and are happy that Chrysaor recognizes the value of this business.  This disposition is part of our ongoing effort to hone our portfolio and focus our investments across future low cost-of-supply opportunities.’

   

Phil Kirk of Chrysaor said: ‘It’s the deal I wanted to do, and my board wanted to do.  It’s great for geography, the resources, and the platforms.  We’ve become one of the largest UK producers.  We’ve got a strong reserves base, and this gives us a great forward plan with the potential to chase around Britannia and J-Area.  It gives us a stake in Clair which is interesting as we build the position West of Shetland.  I am proud of everybody in the organization, what we’ve achieved together, and what we’re going to achieve.  The next steps are focused on getting this deal to completion and over the line.  We have a lot to do with our existing portfolio and in the short term, we’re focused on making this a success.

   

In the Central North Sea, we will own a range of operated hub infrastructure providing access points in an area with the largest undeveloped contingent and prospective oil and gas resource base in the UK.  In the West of Shetlands region, we have secured long life cash flows from two world-class fields operated by BP.  Chrysaor’s West of Shetlands position also provides exposure to a developing region with significant interest and momentum from major oil companies.  We will seek to build on that through the acquisition of more interests and acreage.

     

This significant acquisition reflects our continuing belief that the UK North Sea has material future potential for oil and gas production.  These assets complement our existing operations and, with operating costs at less than $15 per barrel across the enlarged group, our portfolio delivers high margins and significant positive cash flow.  We see exciting growth opportunities in the North Sea and are looking forward to working with our new colleagues to sustain and deliver our value and growth targets.’

   

Deirdre Michie of Oil and Gas UK said: ‘ConocoPhillips UK has been a stalwart of the North Sea and this acquisition will help make sure that its legacy continues.  I’d personally like to pay thanks to them for the impressive contribution they have made to this industry over the years.  The landscape of the UK industry continues to evolve.  This diversity of players in the basin is helpful in securing a sustainable industry that delivers a domestic supply of oil and gas for decades to come.  These changes reinforce that the North Sea continues to be an attractive investment opportunity with an exciting and long-term future.  Our challenge, as we look ahead to Vision 2035, is to keep our focus on sustaining and deepening our competitiveness across the basin.’

   

Chrysaor has already shown it's ready to take mature assets and invest to boost production with its efforts in the Greater Armada Area, which they bought from Shell in 2018.  Chrysaor also shoulders duty for a rolling retirement program of ConocoPhillips UK’s end-of-life assets in the UK Southern North Sea.  Chrysaor aims to finish up this program by 2022 and values this core competency as a long-term commercial prospect in the UK.

   

Linda Z. Cook of Chrysaor said: ‘We are excited to play a role in the natural evolution of the North Sea and to enable the safe transfer of assets from major oil companies such as ConocoPhillips to new, well-funded, privately-owned operators.  This process results in a good deal for both the seller and the buyer, with new asset owners such as Chrysaor bringing the strategy and capital required for reinvestment and growth.  The outcome is a reinvigorated oil and gas sector, an extension of the producing life of existing fields, and the maximization of hydrocarbon resource recovery.’
   

Chrysaor will fund the deal through existing cash resources and a $3 billion reserve-based debt facility underwritten by Bank of Montreal, BNP Paribas, DNB Bank, and ING Bank.

   

BMO Capital Markets and Jefferies served as financial advisers to Chrysaor.