Verus moves to next phase of growth plan as production rises 12-fold through drilling and acquisitions
Verus Petroleum is moving on to a new phase of growth, having secured a 12-fold increase in its production – from 1,500 to 18,000 BPD in less than a year – through drilling and key acquisitions in the UKCS.
The private equity backed independent operator has recently completed three significant acquisitions; an interest in the Babbage gas field acquired from Premier Oil on 6 December, on the back of completing transactions to acquire Cieco Exploration & Production and Equinor’s Alba field interest in November.
These three deals, each with an economic date of 1 January 2018, were funded by a combination of equity, existing cash reserves and debt. Equity has been provided by HitecVision, the majority-owner of Verus.
Together with the drilling of two wells on the Boa field, the acquisitions add approximately 17,000 BOE to Verus’s daily production, materially increasing Verus’s cash flow.
“We are delighted to have completed these transactions which are aligned with our strategy to expand our production base and cash flow through the acquisition of high-quality production assets,” Alan Curran, Chief Executive of Verus Petroleum, said. “Long-term, our aim is to build a full-cycle E&P company of scale. We now have a diversified portfolio of high-value barrels with low-lifting costs in predominantly long-life fields with very strong cash generation, giving us the platform to achieve that aim.
“Our acquisition in the Boa oil field in 2017 announced our arrival; the completion of these three deals – within a matter of months – is a strong show of our resolve to become one of the leading independents in the basin,” Mr Curran said. Mr Curran adds that the business has a strategic goal to secure operatorship of assets in the short-to-medium term, utilizing the company’s technical and operational expertise to secure commercial success.
“HitecVision’s continued support provides Verus with a solid capital base. This is a robust foundation for further growth. We are now looking to reinvest the cash flow from these assets in further long-life production and development opportunities,” Mr Curran said.
On 14 November 2018, Verus signed an amended and restated Reserves Based Lending Facility (RBL) with its existing lead Nedbank and six new banks to the facility. The new banks are DNB Bank ASA, Lloyds Bank, BMO Capital Markets, Commonwealth Bank of Australia, Skandinaviska Enskilda Banken AB and Royal Bank of Scotland. All are internationally recognized in the RBL market.
The RBL has been increased to $500 million and, with the strong support received from the banks and HitecVision, the company has access to material funds to finance acquisitions beyond those already announced.
