Tullow Oil is to strengthen its Dutch portfolio through the acquisition of Nuon Exploration & Production, it has been announced.
Tullow will pay Sweden’s Vattenfall Group €300 million in cash for the Amsterdam-based company.
Tullow said the acquisition will significantly enhance its North Sea business, adding a portfolio of 25 licences that include over 30 producing fields, further development and exploration opportunities, and ownership of crucial infrastructure.
The portfolio will increase Tullow’s North Sea gas production by 9,000 boepd to approximately 23,000 boepd, adding reserves and resources of 28 mmboe.
Tullow's existing European interests are mostly focused on gas in the UK Southern North Sea, where it has interests in the Caister-Murdoch System (CMS) and the Thames area. However the company does also have interests offshore the Netherlands, providing exploration opportunities adjacent to its CMS acreage. Tullow is the operator of six out of seven licences it holds in Quadrants D & E, with a total acreage position across all the licences of 2,459 square kilometres.
On its website, Tullow says that growth in its acreage in the Netherlands is in response to the maturity and future materiality limits of the UK CMS area. However, the Nuon transaction comes just weeks after the UK government raised taxes for producers in its section of the North Sea.
Commenting, Paul McDade, Tullow's chief operating officer, said: "This acquisition is a natural fit with Tullow's Southern North Sea portfolio and materially enhances our potential for growth in the Dutch sector, an area with significant opportunities and a stable tax regime. Whilst the scale of the acquisition is modest from a group perspective, it significantly enhances the value generation potential of our North Sea business."
Headquartered in London, Tullow has interests in over 90 exploration and production licences across 22 countries and focuses on four core areas: Africa, Europe, South Asia and South America.
The Nuon transaction is expected to complete by July 2011.
