Expands Caesar Tonga interest

By Richard Rostad, analyst, Oil & Gas 360

Equinor (ticker: EQNR), formerly Statoil, announced several moves this week, expanding its offshore activities in both the GOM and North Sea.

On Monday Equinor announced it has exercised its option to expand its interest in the Caesar Tonga oil field, a major oil play located in offshore Louisiana. Equinor will acquire an additional 22.45% interest in the field from Shell, increasing its share in the field to 46%. Equinor will pay Shell $965 million in the deal, acquiring all of Shell’s interest in the field.

Equinor Snatches GOM Asset from Delek’s Outstretched Hand

The field is currently producing about 70 MBOEPD gross, so Equinor’s share of the production will rise from 16.5 MBOEPD to 32.2 MBOEPD, meaning Equinor paid for 15.7 MBOEPD, equating to $61,400 per flowing BOEPD.

Anadarko is the operator of Caesar Tonga, holding a 33.75% interest, while Chevron holds the remaining 20.25%.

Deal appears to supersede identical sale to Delek

This deal is somewhat unusual, as in April Shell announced it would sell its entire interest in Caesar Tonga to Delek, also for $965 million. Equinor’s acquisition appears to supersede this agreement, though it is a deal for the exact same asset at the exact same price. Equinor is likely able to make this deal because it is already an owner of the field, a situation that may give it first refusal or other preferential treatment.

Johan Sverdrup phase two approved

Equinor also announced its development plan for the second phase of Johan Sverdrup has been formally approved by Norwegian authorities, allowing construction to begin. Johan Sverdrup is the largest Norwegian continental shelf project in decades. Phase two will add 220 MBOPD of production, bringing total output to 660 MBOPD.

Phase two is a major endeavor, including a new processing platform, modifications to the riser, additional subsea systems and an expanded power supply. In total, the project is expected to cost $4.8 billion, compared to $9.9 billion for phase one.

Equinor reports phase one is on schedule to start production in November 2019, while phase 2 will start up in Q4 2022.

Tags: , , ,

Legal Notice