Calgary—Alberta’s Talisman Energy has agreed to sell a minority stake in its U.K. North Sea operations to Chinese integrated energy firm Sinopec in a $1.5-billion deal.
According to Talisman, Sinopec will acquire a 49 per cent equity interest in Talisman Energy (U.K.), Ltd., (TEUK), which has been operating in the North Sea off the eastern British coast since 1994.
“We are very pleased to reach this agreement with Sinopec for the next phase of development of our UK North Sea assets,” Talisman president and CEO John Manzoni said in a statement. “This will provide additional resources and energy to the talented team on the ground, creating an exciting future for this portfolio.”
The deal structure will be a corporate joint venture whereby Sinopec will buy 49 per cent of the shares of TEUK for $1.5 billion, with adjustments for working capital.
According to the company, the effective date of the sale is January 1, 2012, with the transaction expected to close by year-end, subject to government and regulatory approval.
The joint venture plans to invest to improve ongoing operating performance, as well as infill drilling, exploration opportunities and major projects.
TEUK will operate the assets—46 oilfields, 11 offshore installations and one onshore terminal—and Sinopec will appoint select personnel into key positions within the organization.
Based in Aberdeen, Scotland, TEUK employs 564 full-time workers, with approximately 1,950 core contractors.
Talisman said no personnel reductions are expected as a result of the deal.
Manzoni said the deal will allow for further investment in the U.K. that Talisman wouldn’t be able to complete on its own.
The deal comes as Talisman looks to reduce its working interest and capital spending in its U.K. subsidiary by approximately half.