Tullow to buy Spring Energy and dispose of North Sea gas assets

London-listed oil titan Tullow has said that it is to buy Norwegian exploration group Spring Energy Norway, as it announced that it will begin disposing of its non-core gas assets in the North Sea.

The firm is paying $372.3m for Oslo-based Spring, which holds 28 offshore licences across Norway's continental shelf North, Norwegian and Barents Seas covering around 18,000 square km. Tullow will also pay a "bonus payment" subject to Spring's exploration success.

The company said that Spring's exploration portfolio contains over 230m barrels of oil equivalent (mmboe) of risked prospective resources and has existing reserves and resources of 24 mmboe. This will be integrated into a new division of Tullow named Tullow Norge.

"Following Tullow's pre-qualification as an Operator on the Norwegian Continental Shelf earlier this year, the acquisition of Spring enables us to rapidly build a strong platform for future growth in Norway," Tullow said.

Disposal of UK and Dutch SNS gas assets

Tullow also revealed that it is ready to start the process of selling off its exploration, development and production assets in the UK and Dutch Southern North Sea, which is expected to be completed by the end of 2013.

The gas assets, which currently produce around 18,000 boe per day, are said that have been "highly successful" for Tullow but given recent success in Africa (namely Ghana, Kenya and Uganda), these assets are now being classed as "non-core" and "no longer fit within Tullow's light oil-focused portfolio".

Chief Executive Aidan Heavey said: "Active portfolio management is a key part of Tullow's exploration-led strategy. These transactions are part of an ongoing process of carefully refocusing our business and ensuring efficient allocation of capital by monetising non-core assets and re-investing the proceeds in high potential oil exploration.

"Our Southern North Sea gas assets are therefore no longer core to Tullow's business which has a clear focus on light oil in Africa and the Atlantic Margins," he said.

Operational update

In a separate statement, Tullow announced that production has started at the Jubilee Phase 1A field in Ghana, with the Okure-1 exploration well having already encountered a low net to gross oil bearing reservoir after reaching its total depth of 4,511m.

While light oil with a 40-degree API was recovered, analysis of wireline logs and pressure data show that this oil accumulation is "not connected to other hydrocarbon discoveries in the licence area".

The first production well on Jubilee Phase 1A has been brought on stream and is now producing over 16,500 barrels of oil per day (bopd), pushing field production up to over 90,000 bopd.