Ithaca Energy has reached an agreement to acquire Aberdeen-based Siccar Point Energy for $1.5bn.
The deal comes with a pledge from the new owner to develop Cambo and the nearby Rosebank oil field.
The consideration of the agreement includes an upfront payment of $1.1bn and a series of contingent payments totalling a maximum of $360m linked to future developments and $60m linked to short-term realised commodity prices.
Siccar Point team's will transfer to Ithaca and the transaction is expected to complete by the end of the second quarter.
Environmentalists have criticised plans to develop Cambo, warning it would exacerbate global warming, while the First Minister stated it should not be green lit over climate concerns.
Shell has a 30% stake in the oil field, but announced in December had paused its development in the Cambo oil field, arguing the "economic" case at this point wasn't strong enough. More recently, the oil giant stressed there was “no change to our position”, although it also noted that a new contract extension gives time to “evaluate all potential future options”, especially in light of the war in Ukraine.
The oil field is thought to contain 800 million barrels of oil. The original exploration licences date back to 2001, but the UK Government is still required to give the development final approval.
The Scottish Government stated that unlimited extraction of fossil fuels was not consistent with its climate obligations.
“We have consistently called on the UK government to urgently re-assess all approved oil licenses where drilling has not yet commenced against our climate commitments,” said a spokesperson.
“New oil and gas fields do not present a timely solution to improving our energy security in the coming years - even once operational, the extracted fossil fuels will still be affected by the same global market forces which have contributed to the current energy price crisis.”
On Wednesday, the UK Government released its energy security strategy, which included a new licensing round for oil and gas projects in the North Sea, recognising “the importance of these fuels to the transition and to energy security”, adding that producing gas in the UK had a lower carbon footprint than that imported from abroad.
The acquisition should double Ithaca’s recoverable reserves and support production of at least 80,000 to 90,000 barrels of oil through the next decade, with the potential to increase this through further portfolio opportunities.
Ithaca has plans to reduce its current environmental programmes, which aim to reduce carbon dioxide output by 25% by 2025.
The Cambo field is anticipated to deliver up to 170 million barrels of oil equivalent during its 25-year operational life, helping to reduce the need for the import of more carbon intensive alternatives and increasing the UK’s energy independence through the energy transition, according to a statement.
Alan Bruce, chief executive at Ithaca Energy, commented: “The acquisition doubles our recoverable resources and means that we now have interests in a significant portion of the largest UK Continental Shelf fields - this includes interests in two of the UK’s most strategically important and near-term developments which will enable us to play an increasing role in securing domestic energy supply for the UK.
“We firmly believe that this transaction will deliver value for all of our stakeholders including the local community and wider UK economy.
“The development of the Cambo and Rosebank fields is a huge opportunity to not only help secure the UK’s energy future for at least another quarter of a century, but also to create thousands of direct and indirect jobs in the process.”
Jonathan Roger, chief executive at Siccar Point Energy, commented: “Ithaca is extremely well placed, given its material production base, to pick up the baton and unlock the significant growth opportunities in the Siccar Point portfolio.
“This will ensure the UK continues to deliver reliable UK oil and gas production for powering homes and businesses and manufacturing essential products and maintaining energy security during the planned energy transition.”
Greenpeace UK’s oil and gas campaigner Philip Evans responded: “Don’t be fooled by this red herring - Cambo’s oil won’t improve UK energy security since the kind that can be extracted from this field can’t be processed in UK refineries.
“Emboldened by the UK Government’s reckless decision to green light more oil and gas extraction, fossil fuel companies will continue to profit under this pretence unless the government reverses its plans to maximise extraction.”
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