Menu

FlowStream and Cairn Agree a US$200 Million Stream on the Kraken and Catcher Oil Fields

March 8, 2017

ST. HELIER, JERSEY 8TH MARCH 2017

Transaction Overview

FlowStream Commodities Ltd (“FlowStream”) is pleased to announce that it has reached agreement with Cairn Energy PLC (“Cairn”) on the terms of a two tranche stream for an aggregate amount of US$ 200 million. The stream is on Cairn’s interests in the Kraken and Catcher fields on the United Kingdom Continental Shelf. The first tranche of the stream, which is for US$75 million and is only on Cairn’s interest in the Kraken field, will be fully drawn at completion. The second tranche can be called upon at any point in a two year period following completion, subject to certain approvals, including the approval of Cairn’s banks.

Transaction Highlights

Key attractions of the stream with Cairn include:

  • Exposure to two of the largest, independent-led, UK Continental Shelf development projects
  • The respective field operators expecting more than 200 million barrels of oil equivalent of production in aggregate from the two developments
  • Combined with FlowStream’s stream with Premier Oil on the Solan oil field, which has now entered into production, FlowStream will have been involved in streaming the majority of the largest, recent, independent-led developments in the UK Continental Shelf
  • Together with FlowStream’s UK Continental Shelf producing streams on Solan and the Breagh gas field, FlowStream has a balanced portfolio with growth for the rest of this decade and material OECD cashflow into the next decade
  • Stream returns calculated by reference to Cairn’s share of the gross production of Kraken and Catcher
  • Partnering with one of the most successful European independents whose successes in recent years include returning more than US$ 4.5 billion of cash to shareholders following its global success in oil exploration

Kraken Oil Field Overview

The Kraken oil field is a key near term producing development project within Cairn’s portfolio. The field is located in UKCS Block 9/2b within the P1077 licence, approximately 350 km north east of Aberdeen in 110m of water.

Key highlights of the Kraken oil field include:

  • Operated by EnQuest (70.5%) with Cairn as JV partner (29.5%)
  • Expected by the operator to produce over 130 million barrels of oil
  • The operator anticipates production life of over 20 years with a targeted field plateau production rate of over 50 thousand barrels of oil per day
  • Field development plan based on a leased FPSO with 13 producers and 12 water injectors
  • Well advanced development drilling campaign underway since mid 2015
  • Operator recently announced that development costs have been reduced by over 22% and expects first oil in 2017

Catcher Oil Field Overview

The Catcher oil field, which is currently under development, is another key near term producing development project for Cairn. The field is located in UKCS Block 28/9a in Licence P1430, approximately 150 km east of Aberdeen in 90m of water.

Key highlights of the Catcher oil field include:

  • Operated by Premier Oil (50%) with Cairn (20%), MOL (20%) and Dyas (10%)
  • Expected by Premier Oil to produce approximately 100 million barrels of oil equivalent
  • Targeted field plateau production rate of 50 thousand barrels of oil per day, utilising 14 producers and 8 water injectors
  • Field development plan utilizing a leased FPSO with gas to be exported by pipeline linked to North Sea gas infrastructure
  • Development drilling in progress since July 2015
  • The operator has recently announced that the development plans are on schedule and on budget and expects first oil to be achieved in late 2017

Jan Laubjerg, Chief Executive Officer of FlowStream, commented:

“We are delighted to have agreed a US$ 200 million stream with Cairn on their Kraken and Catcher fields interests. With net cash of circa US$ 335 million as of 31 December 2016 and an undrawn US$ 575 million reserves based loan, Cairn is one of the best capitalised European based independents, with a wide range of alternative sources of capital available to it. In light of this, we are particularly delighted that Cairn has recognised the risk management and balance sheet benefits of diversifying its sources of funding to now also include streaming. Having carried out comprehensive due diligence on the Kraken and Catcher fields and their respective developments extensively for some time now, we understand the projects and are confident in the respective joint ventures’ abilities to deliver these two landmark development projects on the UK Continental Shelf.”

Completion of the transaction is subject to OGA approval.

Enquiries:

FlowStream Commodities Jan Laubjerg

Ben Iversen

+41 41 784 50 60

 

Notes to Editors

FlowStream is a streaming and royalty company focused on the oil & gas sector. FlowStream provides upfront cash for oil & gas companies and in return receives an oil and/or gas stream on a specific licence, lease or field. FlowStream also acquires existing streams and royalties in the oil & gas sector. FlowStream, with the support of its shareholders, who include KKR, Global Gate Capital and Anglo Pacific Group, intends to grow and diversify its portfolio of streams and royalties by sourcing primarily development and producing assets on a worldwide basis. For more information, please visit www.flowstreamcommodities.com

Cairn is one of Europe’s leading independent oil and gas exploration and development companies and is listed on the London Stock Exchange. Cairn has discovered and developed oil and gas reserves in a variety of locations around the world. Cairn’s business operations are now focused on frontier exploration acreage in North West Europe, North West Africa, North Atlantic and Mediterranean, underpinned by interests in development assets in the North Sea. Cairn has its headquarters in Edinburgh, Scotland supported by operational offices in London, Norway and Senegal.

Download press release as a PDF