SSE to Buy 20% Stake In 4 North Sea Gas Fields for GBP565 Million

   By Alex MacDonald 
 

LONDON--U.K. utility SSE PLC (SSEZY) said Wednesday it has agreed with French oil and gas major Total SA (TOT) to buy a 20% stake in four gas fields in the North Sea's Shetland Islands and a 20% stake in a new Shetland gas plant for GBP565 million ($881 million)in cash.

Following completion of the acquisition later in the financial year ending March 30, 2016, Total will continue as operator of the fields and plant with a 60% stake in the assets. The remaining 20% is owned by DONG Energy.

As part of the deal SSE has agreed to invest a further GBP350 million by 2018 to complete the fields' development.

The fields are located in the Greater Laggan Area where gas production is forecast to start later this financial year and is due to hit a peak production rate of five million therms of gas per day in 2016. SSE will be entitled to one million therms per day of that production.

Production from the acquired fields is expected to be sustained at that level until around 2020, before declining over the following 10 years in the absence of further development.

The agreement comes at a time when SSE's existing production volumes are expected to decline. The acquisition will help sustain the company's annual attributable gas output above last year's level for several years to come.

The transaction will be financed by a future bond issue and by proceeds from SSE's ongoing asset disposal program.

Write to Alex MacDonald at [e-mail]

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