EnQuest buys Suncor's stake in Golden Eagle Area for US$325 million

EnQuest is acquiring Suncor Energy's 26.7% equity in the producing Golden Eagle Area in the UK's Outer Moray Firth for US$325 million. An additional contingent consideration of up to US$50 million will be payable should the oil price equal or rise above pre-agreed thresholds. Golden Eagle is operated by CNOOC with a 36.6% stake. Other partners are NEO Energy (31.6%) and ONE-Dyas (5.2%). While EnQuest is already heavily indebted and having to finance the deal through a new debt facility and equity raise, we think this is a good one for the independent. The assets will add near-term cash flow and much needed resilience to EnQuest's relatively high cost business. They will also allow acceleration of its tax loss pool, the value of which would have been stranded in the current portfolio. The asset will be EnQuest's third largest in terms of value, behind Kraken and Magnus. For Suncor, this deal was more about strategy than strengthening the balance sheet.