EnQuest PLC, an oil and gas production and development company, announced it signed an agreement with Whalsay Energy Holdings Limited to purchase Whalsay’s 100% equity interest in the P1078 license containing the proven Bentley heavy-oil discovery.

This discovery is within 15 kilometers (10 miles) of the Group's existing Kraken and Bressay operated interests, offering further long-term potential development opportunities and other synergies. The transaction will be affected through the acquisition of Whalsay's subsidiary, Whalsay Energy Limited (WEL) which holds the license as its only asset, on a cash, liability and debt free basis.

On completion, EnQuest will fund certain accrued costs and obligations of WEL, expected to amount to less than $2 million. No other upfront consideration is payable. EnQuest will make deferred payments to Whalsay based on future revenues generated by WEL which are capped at $40 million.

Completion of the transaction is subject to the satisfaction of a number of conditions precedent, including the UK Oil and Gas Authority granting an extension of the existing license term, which is currently due to expire June 30, 2021, and the receipt of other third party approvals.

As of December 31, 2019, the date of the most recent audited accounts, WEL had gross assets valued at around $95 million, consisting primarily of intangible assets representing historic capitalized exploration and evaluation activities on the Bentley license. For the year ended December 31, 2019, WEL recorded a loss before tax of around $72 million, primarily resulting from the recognition of an impairment charge against the Bentley license.

Source - www.worldoil.com