Small step for oil firm may have big impact

ANALYSIS WHILE an analyst described the deal that saw Chrysaor take full control of the Armada area fields east of Aberdeen as a bolt-on the implications for the UK North Sea may be significant.

Chysaor has agreed to acquire Spirit Energy’s interest in the fields just four months after completing the purchase of a giant portfolio of North

Sea fields from Shell.

The latest deal underlines Chrsyaor’s willingness to invest in the assets it acquired from Shell, which included an interest in the Armada cluster.

Chief executive Phil Kirk said Chrysaor intends to invest in extending the lives of the assets and will not hang around.

The company plans to start work soon on preparations for drilling, which could pave the way for undeveloped finds in the area to be brought onstream. This holds out the prospect of badly-needed work for the supply chain.

Services firms have been battling grim trading conditions amid deep cuts in spending by many operators in response to the oil price fall since 2014. New work can not come soon enough for some.

As previous owners planned to shut Armada down this year the Government may net unexpected production taxes. Decommissioning work will be delayed, postponing the associated expense for the Treasury.

The Armada infrastructure could be utilised by other firms.

Spirit can focus on its core North Sea assets.

With other private equitybacked firms taking a similar approach to Chrysaor, changes in assets ownership could provide a valuable boost for the North Sea.