Hartshead will receive a total consideration of about A$196.3m ($131m) for the first phase development, which includes refund for previous costs, including Hartshead’s share of development costs and milestone payments
Hartshead offloads 60% of its UK North Sea License. (Credit: Ben Wicks on Unsplash)
UK-based Viaro Energy, through its subsidiary RockRose Energy, has completed a farm-out agreement with Hartshead Resources, for a 60% stake in its Production License P2607.
Last month, Viaro has originally signed a farm-in agreement (FOA) with Hartshead, for the stake in its UK Southern Gas Basin licence, which includes Anning and Somerville fields.
Under the terms of the FOA, Hartshead will receive a total consideration of about A$196.3m ($131m) for the first phase development.
The consideration includes refund for previous costs, including Hartshead’s share of development costs, milestone payments, and $48.4m investment by the UK government.
Hartshead CEO Chris Lewis said: Hartshead has the equity funding required to meet the Company’s share of non-debt project development costs for Phase
“Retaining the EPL tax benefit to Hartshead takes the gross consideration for the divestment of Phase 1 to A$196m, which is an outstanding achievement for our shareholders.
“The Hartshead team is advancing the project work streams with completion of FEED and FDP imminent and our FID planned for Q3 of this year.”
Hartshead said that the completion of the FOA will materially de-risk the project and provides full financing for the further development.
The company will use initial cash payment of over A$12m, along with A$135.7m commitment from RockRose, to meet its equity requirement for the project development costs.
The transaction indicates a significant raise in project valuation, with gross project expenditure estimated to be more than $536m.
A Final Investment Decision (FID) for the first phase of the project, which includes redevelopment and drilling works at the Anning and Somerville fields, is anticipated in Q3 2023.
The company plans to commence production from six production wells in 2025 at gross peak production rates of 140mmcfd.
Furthermore, Hartshead has recently advanced discussions with several groups, to refinance its debt and remaining share of development costs.