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 alex.macdonald@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires