Kuwait will invest $500 million in EnQuest Plc (ENQ)’s Alma and Galia oilfields in the U.K. North Sea in exchange for a 35 percent stake in the prospects.
As part of the deal Kuwait Foreign Petroleum Exploration Co., or Kufpec, will contribute as much as $182 million to past and future costs, EnQuest said in a statement in London today. EnQuest said the total cost of developing Alma and Galia will be $1 billion.
“This enhances the economics for us,” EnQuest Chief Executive Officer Amjad Bseisu said in a telephone interview. “While selling the stake will reduce our production targets somewhat, we’re hoping that the additional capital can be used for other development opportunities or to acquire more producing assets.”
The deal is the second this month for EnQuest after increasing interests in the Kildrummy and Cairngorm discoveries as the company tries to bolster output. Danny Alexander, a U.K. government minister, said today’s deal showed that the North Sea is still attracting investment after the government introduced a surprise tax increase on crude oil profits in 2011.
In March, Chancellor of the Exchequer George Osborne guaranteed tax relief for dismantling platforms and promised to increase tax allowances on marginal fields.
“This is good news for northeast Scotland and the whole of the U.K.,” Chief Secretary to the Treasury Alexander said. “The government will continue working with the industry in the North Sea to get the most of what is a huge national asset.”
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