EnQuest in talks over Kraken stake sale

EnQuest is in talks with a subsidiary of Delek Group about the potential sale of a 20% stake in its Kraken field as it looks to reduce its debt.

The North Sea oil operator has signed a non-binding memorandum of understanding with Delek and the two are now working towards executing binding transaction documents.

Under the terms of the proposal, Delek would share the capital expenditure of the project from 1 January 2016.

Upon completion, Delek would advance$20m to EnQuest for up to five years at an annual interest of 3% which would be returned to Delek in the event that its costs are not covered by revenues within five years from the completion date.

EnQuest, which said there is no guarantee a final agreement will be reached, had previously announced that in addition to its ongoing cost reduction initiatives, it was also pursuing a range of further opportunities for debt reduction, including potential asset sales and farm outs.

Earlier this year, EnQuest upped its stake in Kraken to 70.5% with the acquisition, for nominal consideration, of an additional 10.5% share from First Oil.

At 1434 BST, EnQuest shares were down 0.4% to 29.62p.