Hartshead Resources NL has completed the farm-out agreement with RockRose Energy Ltd for a 60% equity interest in its Seaward gas licence P2607 in the southern North Sea.
TERMS
The deal gives the Australian company gross A$196.3 million (£105m) for phase I of operations and A$536m (£287m) of gross project expenditure.
RockRose’s initial cash payment of more than A$12m (£6.4m) takes Hartshead’s cash balance to over A$35m (£19m).
A total of A$135.7m (£73m) committed by RockRose for purchasing the 60% interest will meet Hartshead’s equity needs for project development costs of Phase I.
RockRose, formerly owned by Andrew Austin of Kistos, was sold in February 2022 to Viaro Energy owned by Italian businessman Francesco Mazzagatti.
Companies House lists RockRock’s two directors as Francesco Dixit Dominus who lives in England and Mr Mazzagatti in the United Arab Emirates.
FID
Phase I operations focus on the Somerville and Anning gas fields, both of which have “historic production, multiple well penetrations, 3D seismic coverage” and combined independently “audited 2P reserves of 301.5 bcf of gas”.
Hartshead added that front end engineering and design (FEED) was nearing completion and the field development plan will be submitted to the North Sea Transition Authority this quarter.
Discussions are “well advanced” with parties for funding the company’s remaining expenditure via a bond issue or gas pre-sales. Talks are expected to conclude alongside a final investment decision (FID) during Q3 2023.
Chief executive Chris Lewis said that completion of the farm-out was a significant milestone in derisking the project and providing contribution to capital expenditure.
“Hartshead has the equity funding required to meet the company’s share of non-debt project development costs for Phase I.
“Retaining the EPL [energy profits levy] tax benefit to Hartshead takes the gross consideration for the divestment of Phase 1 to A$196m [£105m], which is an outstanding achievement for our shareholders.”
Licence P2607, covering 729.5 km2, comprises five blocks in quads 48 and 49 containing multiple gas fields of which some are only partially developed.
Hartshead’s said that the licence also has multiple exploration prospects with a “combined resource base of circa 0.8 tcf of gas” across phase I, II and III of the field development programme.
The company’s overall aim is to build a “financially, technically and environmentally responsible” European energy business.
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