Fieldfisher advises IOG on £185 million North Sea farm out-deal
Firm assisted long-standing client Independent Oil & Gas PLC on corporate, finance, tax and real estate matters and provided specialist oil and gas expertise in relation to IOG's sale of 50% of its southern North Sea assets to CalEnergy Resources.
Fieldfisher, a European law firm specialising in energy and natural resources, advised AIM-listed Independent Oil & Gas PLC (IOG) on its widely reported deal to sell 50% of its assets in the southern UK North Sea to CalEnergy Resources.
The complex farm-out agreement will see CalEnergy, a subsidiary of Berkshire Hathaway Energy Company, pay £40 million upfront (plus potentially a further £20 million) to complete its acquisition of all IOG's upstream assets, with the exception of its Harvey licences over which an option exists.
The deal also covers the Thames Pipeline, which IOG is recommissioning to transport gas 90km from its southern North Sea fields, to the gas-receiving and processing facilities at Bacton on the Norfolk coast.
As part of the agreement, CalEnergy will pay up to an additional £125 million towards IOG's development costs for the first two phases of its field developments, comprising 410 billion cubic feet of gas reserves across six North Sea gas fields.
Partner Mark Nash led the corporate team at Fieldfisher in advising IOG on all corporate matters in relation to the farm-out and assisted the company on structuring the transaction, which is a prime example of the kinds of innovative deals that are reshaping the UK North Sea E&P sector.
In addition to corporate, tax and finance advice, Stuart Carter, Head of Oil and Gas at Fieldfisher, was able to provide specialist oil and gas expertise and the firm's real estate team supplied detailed guidance on matters concerning the pipeline aspects of the deal, which is a key component of IOG's asset package.
As part of this flexible and iterative arrangement IOG, which will retain operatorship of the assets, will pay CalEnergy a royalty of 20.2% of net revenues from phase one, but will receive a royalty worth around £9.7 million in relation to production from the Goddard field.
CalEnergy also has an option to farm-in to 50% of Harvey within three months of completion of an appraisal well, which is expected to spud in August 2019.
The deal also includes a restructuring of IOG's existing financing arrangements and the issue of a secured Bond which will be listed on the Oslo Stock Exchange.
Commenting on the deal, Dominic Gurney-Champion, Co-Head of Energy at Fieldfisher, said:
"We were delighted to bring this transaction to a successful conclusion for our client, IOG, and to have delivered such a progressive deal for an ambitious company on the path to becoming a substantial UK gas producer.
"The complex nature of this farm-out required dedicated cross-departmental expertise from across the firm, including our sector-leading oil and gas team, corporate, finance, tax and real estate practices.
"As the make-up of the UKCS continues to evolve with the growth of small and mid-cap E&Ps and the arrival of new kinds of investor, we look forward to advising on many more pioneering deals for our clients."
Fieldfisher is a European law firm with market leading practices in many of the world's most dynamic sectors. We are an exciting, forward-thinking organisation with a particular focus on energy & natural resources, technology, finance & financial services, life sciences and media.
Fieldfisher's dedicated energy team advises companies, commodity trading houses, banks and investment funds on a wide range of matters. We have been active in the energy and natural resources sector for over 50 years and have a team more than 100 lawyers internationally.
The firm is also one of the leading legal advisers to companies listed on London's AIM market, many of which are in the natural resources sector.
Our network has more than 1,550 people working across 25 offices providing highly commercial advice based on an in-depth understanding of our clients' needs.
We operate across our offices in Amsterdam, Barcelona, Beijing, Belfast, Birmingham, Bologna, Brussels, Dublin, Düsseldorf, Frankfurt, Guangzhou, Hamburg, London, Luxembourg, Madrid, Manchester, Milan, Munich, Paris, Rome, Shanghai, Turin, Venice and Silicon Valley.
Fieldfisher was named as a top 20 firm by the FT Innovative Lawyers Awards 2018.