Serica Energy and BP agree to extend BKR transaction timetable

Serica Energy has agreed with BP to extend the completion timetable for the BKR transaction for one month until early November, it announced on Friday.

The AIM-traded company said the extension was to enable outstanding regulatory and partner consent processes to be completed, including processes by the US Office of Foreign Assets Control relating to the Rhum Field.

It said those consents were part of the conditions for completion as set out when the BKR transaction was announced.

For operational and logistical reasons to ensure a safe and efficient transfer of ownership and operations, they were required “a few weeks” before transfer of operations could begin.

Serica said both itself and BP were working “closely together”, and remained committed to achieving the new timetable.

The terms of both the BP transaction and the related transaction with Total remained unchanged.

In particular, Serica said it continued to be entitled to a share of net cash flows from the BKR assets relating to the BP and Total interests during the period from the effective date of the BP and Total acquisitions - 1 January 2018 - to the date of completion.

That would continue to be the case under the extended timeline, with gas prices achieving record levels during the effective period since the start of the year.

All other transition requirements, including the transfer of offshore and onshore staff, readiness of operating, safety and environmental procedures and transfer of all contractual obligations, were reportedly ready to complete once all outstanding consents had been received.

Serica said it had made “good progress” with the acquisition and transition programme, working closely with BP, and would be ready to assume operatorship of the BKR Assets once the outstanding conditions have been met.

“We have taken the decision to extend the completion period on BKR as a practical measure that provides additional time for the approvals process to complete,” said Serica chief executive Mitch Flegg.

“We are working closely with the various authorities and with field partners to satisfy all remaining conditions and we appreciate the commitment that the relevant parties are making as we near completion of this complex transaction.”

Flegg said Serica was “well prepared” to assume operatorship of the assets.

“Together with BP, we remain fully committed to completing the BKR deal.

“Completion of these important transactions will enable Serica to assume operatorship and optimise the full performance of these valuable UK offshore assets, extend producing life where possible and ensure maximum recovery of remaining reserves.

“Coming at a time of strong gas prices and significantly improved oil prices the company is set to benefit from the resultant strong cash flows which have occurred since the start of the year, as well as from resumed production at Erskine which is expected to occur later this month as planned.”