Aberdeen, UK-based Verus Petroleum has secured a 12-fold increase in its production – from 1,500 to 18,000 barrels per day in less than a year – with the closing of three recent acquisitions on the UK Continental Shelf.
A press release from the petroleum exploration and production services provider said that it has recently completed three significant acquisitions; an interest in the Babbage gas field acquired from Premier Oil on 6th December, on the back of completing transactions to acquire Cieco Exploration & Production (UK) Limited and Equinor’s Alba field interest in November.
The private equity backed independent operator said that these three deals, each with an economic date of 1st January 2018, were funded by a combination of equity, existing cash reserves and debt. Equity has been provided by HitecVision, the majority-owner of Verus.
Together with the drilling of two wells on the Boa field, the acquisitions add approximately 17,000 barrels of oil equivalent (boe) to Verus’s daily production, materially increasing Verus’s cash flow.
Alan Curran, Chief Executive of Verus Petroleum said: “We are delighted to have completed these transactions which are aligned with our strategy to expand our production base and cash flow through the acquisition of high-quality production assets.
“Long-term, our aim is to build a full-cycle E&P company of scale. We now have a diversified portfolio of high-value barrels with low lifting costs in predominantly long-life fields with very strong cash generation, giving us the platform to achieve that aim.
“Our acquisition in the Boa oil field in 2017 announced our arrival; the completion of these three deals – within a matter of months – is a strong show of our resolve to become one of the leading independents in the basin.”
Mr Curran adds that the business has a strategic goal to secure Operatorship of assets in the short-to-medium term, utilising the company’s technical and operational expertise to secure commercial success.
“HitecVision’s continued support provides Verus with a solid capital base. This is a robust foundation for further growth. We are now looking to reinvest the cash flow from these assets in further long-life production and development opportunities,” he said.
On 14th November 2018 Verus signed an amended and restated Reserves Based Lending Facility (RBL) with its existing lead Nedbank Limited and six new banks to the facility. The new banks are DNB Bank ASA, Lloyds Bank plc, BMO Capital Markets, Commonwealth Bank of Australia, Skandinaviska Enskilda Banken AB and Royal Bank of Scotland plc. All are internationally recognised in the RBL market.
The RBL has been increased to $500 million and, with the strong support received from the banks and HitecVision, the company has access to material funds to finance acquisitions beyond those already announced.
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