Norway’s oil and gas giant, Equinor is set to offload its stake in the Corrib offshore gas project in Ireland to Vermilion Energy amounting to $434 million.

The transaction is to take place through a share sale of Equinor Energy Ireland Limited, a company fully owned by Equinor ASA. Per the share distribution of the Corrib project, Equinor owns 36.5 per cent, with Vermilion, the operator owning 20% and Nephin Emergy (43.5%).

The Corrib field started production in 2015 and is located 83 kilometers off Ireland’s northwest coast in water depths of almost 350 meters. Based on estimates, the equity gas volumes to Equinor for 2021 is 58 million standard cubic feet per day (mmscfd).

“Equinor and the buyer have agreed a consideration of US$434 million, before closing adjustment, with an effective date set at January 1, 2022.

“As part of transaction, Equinor and Vermilion have agreed to hedge approximately 70% of the production for 2022 and 2023, and have also agreed a contingent payment that will be paid on a portion of the revenue if European gas prices exceed a given floor level.”
Equinor

Arne Gürtner, Senior Vice President responsible for the United Kingdom and Ireland said: “The Corrib field has been an important non-operated project for Equinor for several years.

“The company has taken the decision to sell the asset to focus our portfolio, in line with the company’s strategy to “capture value from the current strong market and to free up capital that we can re-invest elsewhere.”
Arne Gürtner, Senior Vice President, United Kingdom and Ireland

The deal is subject to approval by partners, government and regulatory bodies. The sale of Corrib means that Equinor will no longer have active business presence in Ireland, after deciding to withdraw from an early phase offshore wind project in the country, Equinor said.

Vermilion’s stake to increase from the sale

Vermilion, in a separate statement said the Corrib acquisition would add around 23 mmboe of 2P reserves and is expected to produce approximately 7,700 boe/d in 2022. Vermilion assumed its operatorship role for the Corrib field after Shell sold its stake to it.

“Based on forward commodity prices, the Corrib Acquisition is forecast to generate approximately $365 million of (Funds From Operations) FFO and $361 million of FCF in 2022 which equates to an FFO and FCF netback of approximately $130/boe.”
Vermilion

With this sale, Vermilion’s interest in Corrib field sill increase to 56.5 per cent, significantly increasing exposure to premium-priced European natural gas. “On a 2022 full-year pro forma basis, European natural gas will represent approximately 22% of our production and approximately 42% of FFO.”

The acquisition also rebalances the international weighting to approximately 39 per cent of production and 60 per cent of FFO based on 2022 full-year pro forma estimates. This further enhances “our geographical and commodity diversification which is a unique differentiation in our business model.”

According to Vermilion, Corrib’s natural gas production features world-class Environmental, Social and Governance (ESG) standards, with best-in-class Scope 1 and 2 emissions intensity of 4.2 kgCO2e/boe and a robust plan for long-term biodiversity enhancement.