Enquest continues on spending spree with £30m deal for Bentley

Enquest has announced it is to acquire Bentley, one of the North Sea’s largest undeveloped discoveries, from Whalsay Energy Holdings in a deal worth up to £30 million.

The North Sea operator will acquire a 100% stake in the asset via a newly-signed share purchase agreement in the P1978 licence.

Bentley, a “heavy” oilfield once estimated to be able to produce up to 300 million barrels using enhanced recovery techniques, lies within 10 miles of Enquest’s Kraken field and also the firm’s recently-acquired Bressay asset.

Enquest is paying only around £1.4m in upfront costs to fund “certain accrued costs and obligations” of Whalsay. It will then make deferred payments based on future revenues generated by Bentley, capped at £28.7m.

Despite its prospectivity, Bentley has a history of being sold at relatively low sums.

Discovered in 1977 and located about 85 miles south-east of Shetland, the field was estimated to be able to produce over a 35year period by former owner Xcite Energy.

Xcite was awarded a 100% working interest in the block containing Bentley in 2003 as part of the 21st UK offshore licensing round.

Whalsay later acquired Bentley and the shares of Xcite, which was in financial strife, for just $1.

Enquest has now highlighted that in 2019 Whalsay faced impairment charges of £52.7m related to the Bentley field, taking pre-tax losses to £68.3m for that year, the latest set of accounts available.

Whalsay said the writedown was based on offers it received as part of a Covidhit sale and farm-out process. Enquest’s latest acquisition comes just a few months after it completed its purchase of Bressay, from Equinor, for £13m.

It continued its spending spree with a £240m deal to acquire Suncor’s 26.69% stake in the Cnoocoperarated Golden Eagle asset.

Enquest is taking steps to replenish its portfolio as many of its operated assets in the North Sea have moved into the decommissioning phase due to Covid-19 and the oil price crash of 2020.

Completion of the Bentley deal is subject to conditions including the Oil and Gas Authority granting an extension of the licence term, currently due to expire on June 30.

Steve Kew, former chief operating officer and cofounder at Xcite, wished Enquest well on the prospect but warned the economics would be challenging.

Mr Kew added: “We totally believe in the field but... you’ve got to be looking at $80-plus a barrel.

“It’s going to require a lot of wells to get the field developed. It’s not a field that can be drained with a few wells, it requires a lot of wells which is where the expense is.”

Developing Bentley and Bressay, another heavy oilfield, in tandem would be an “obvious” move, Mr Kew said, adding: “They need to be developed in a synergistic way.”

Enquest has already said it is considering developing Bressay via the Kraken floating production, storage and offloading vessel, but it has not revealed how it will produce from Bentley.

Heavy oil is more difficult to produce than other crude because of its thick, sticky consistency.

MOVING FAST: Enquest has made a number of North Sea acquisitions as it works on replenishing its portfolio of assets.