UK-based upstream oil and gas player Serica Energy is expanding its North Sea footprint by setting the wheels in motion to acquire the entire interest the UK-headquartered energy giant BP holds in a natural gas field, which is considered the biggest producing gas asset on the UK Continental Shelf (UKCS).
This acquisition comprises a 32% non-operated working interest in the P111 license, containing the Culzean gas condensate field, and P2544, an exploration license adjacent to the P111 asset. Located in the UK Central North Sea, the field, which TotalEnergies operates, is perceived to be the largest single producing gas field in the UK North Sea.
While disclosing its proposed agreement to acquire BP’s stake in the P111 and P2544 licenses in the UK sector of the North Sea, the firm explains that the completion is subject, among other things, to the waiver of applicable pre-emption rights. Lambert Energy Advisory is acting as the company’s financial adviser in connection with this portfolio enlargement.
Since the terms of the joint operating agreement between the Culzean field partners, enable each of BP’s partners, TotalEnergies (49.99%) and NEO NEXT (18.01%), to have the option to acquire the UK giant’s stake in the licenses on the same terms as those agreed by Serica, the proposed acquisition is subject to a pre-emption period which runs for 30 days.
The Culzean mid-life gas condensate field, which was discovered in 2008, came on stream in 2019. Currently, this is seen as the largest gas field on the UK Continental Shelf by output, with production net to BP of around 25,500 boepd in H1 2025, at an exceptionally high operating efficiency of 98%.
The remaining net 2P reserves are estimated at about 33 mmboe, with upside potential from future infill drilling and licensed exploration. The field is believed to have one of the lowest carbon footprints in the UK North Sea, with emissions significantly below the 20 kg /boe sector average.
With an economic date of September 1, 2025, and an upfront cash consideration of $232 million, subject to customary working capital adjustments and partially offset by the receipt of a payment reflecting interim post-tax cash flows between the economic date of the transaction and the completion date, the proposed acquisition is expected to close around the end of 2025.
Based on the agreed terms, there is also provision for two further cash payments contingent on results and production from a large exploration opportunity on the P2544 license and changes to the UK ring-fence fiscal regime.
Serica claims that it can fund the consideration through a combination of interim cash flows from the Culzean interest and existing financial resources, including cash and undrawn amounts under the existing $525 million reserve based lending facility.
However, the North Sea player is also considering putting in place a new acquisition facility, which would be refinanced in due course via increased debt facilities to reflect the company’s larger, more diversified, and cash generative asset base, inclusive of the Prax and Culzean acquisitions, which the firm estimates would support a larger borrowing base.
Chris Cox, Serica’s CEO, stated: “Should this transaction complete, it would deliver a step-change for Serica, adding material production and cash flows from the largest producing gas field in the UK. Culzean is a world-class asset, delivering gas from a modern platform with exceptionally high uptime and low emissions.”
