NEW YORK -- Hess has agreed to sell Scottish & Southern Energy (SSE) various gas production/transportation interests in the UK North Sea for $423 million. It expects the sale to be completed this summer.
SSE will gain interests totaling around 64 MMboe in the Everest and Lomond gas fields in the central North Sea, and the Bacton Corridor and Easington Catchment Area gas fields located in the southern North Sea. The transaction is subject to UK government /partner approvals.
According to SSE, the headline transaction price for these resources is $6.6/bboe, or $1.1/MMcf, with potential upside from new reserves discovered via future exploration.
The company says its needs an average of around 1,300 MMcf/d to supply its customers and to fuel its power stations in the UK. Initially, the new offshore interests will meet around 8% of that target figure.
SSE also gains Hess’ 17.7% equity interest in the BP-operated Central Area Transmission System (CATS), which delivers over 10% of the UK’s gas needs through a 400-km (248-mi) pipeline in the central North Sea to Teesside.
Hess’ Greg Hill, president for Worldwide Exploration & Production, commented: "This sale is part of our company's ongoing portfolio management and optimization. Our strategy is to grow our reserves on a profitable and sustainable basis. The sale of these non-operated, mature fields will help us focus our resources on delivering that strategy."