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China’s Sinopec International Petroleum E&P Corp. (Sinopec) and Canada’s Talisman Energy Inc. have reached a deal for the former to splash out US $1.5 billion acquiring a 49% equity interest in the latter’s UK North Sea business.
“We are very pleased to reach this agreement with Sinopec for the next phase of development of our UK North Sea assets,” said John A. Manzoni, president and CEO at Talisman. “This will provide additional resources and energy to the talented team on the ground, creating an exciting future for this portfolio. Collectively, we will invest more in the UK than Talisman would have on its own, leading to a stronger, more sustainable business.”
He added Talisman also was delivering on two key promises for the year, those of reducing its working interest and cutting its capital spend in the UK business by approximately half, to allow it to focus on and fund growth areas within its portfolio.
The sale brings Talisman’s total divestment proceeds to approximately $2.5 billion so far in 2012.
The deal structure will be a corporate joint venture whereby Sinopec will buy 49% of the shares of Talisman Energy UK (TEUK) for $1.5 billion, with adjustments for working capital. The effective date of the sale is Jan. 1, 2012, and the transaction is expected to close by the end of this year, subject to government and regulatory approval.
The joint venture says it plans to invest to improve ongoing operating performance, as well as infill drilling, exploration opportunities and major projects, thereby extending field life and deferring decommissioning.
Aberdeen-based TEUK will operate the assets, and Sinopec will appoint select personnel into key positions within the organization. TEUK employs 564 full-time employees, with approximately 1,950 core contractors.
Talisman entered the North Sea in 1994 and holds operated and non-operated interests in 46 fields, and operates 11 offshore installations and an onshore terminal.