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LONDON (Alliance News) - Enegi Oil PLC Thursday said that a non-binding memorandum of understanding is now in place setting out the terms of a deal under which Wood Group PSN will take a 50% stake in ABT Oil and Gas Ltd's engineering technology subsidiary, Marginal Field Development Co.
Wood Group PSN is a unit of John Wood Group PLC, while Enegi Oil has a 50% stake in ABT Oil and Gas. ABTechnology owns the other half of ABT Oil and Gas.
In a statement, Enegi said Marginal Field Development Co will be renamed and defined as an upstream energy, oil and gas technology, project management and engineering company whose services are dedicated to the provision of technology that will allow the development of stranded and marginal hydrocarbon fields.
It will be the exclusive provider of engineering services to ABT Oil and Gas projects, but will not hold field equity. That will be held by ABT Oil and Gas Field Equity Co.
Under the proposed deal, Wood Group PSN will initially invest engineering services so that ABT Oil and Gas can complete its unmanned production buoy and self-installing floating tower products to the point where the products on a generic level are capable of satisfying the engineering requirements for the completion of a Field Development Plan.
Wood Group PSN will also proportionally contribute to working capital and will, for projects that satisfy pre-agreed parameters, provide engineering services up to GBP5 million on a deferred payment basis, allowing the Marginal Field Development Co. to complete Field Development Plans for projects in which ABT Oil and Gas participates.
"This is an exciting new development for Wood Group PSN, aimed at maximising recovery of marginal field reserves in the UKCS, reducing running costs for operators and making previously sub-economic fields financially viable," Wood Group PSN UK Managing Director Dave Stewart said in a statement.
"The establishment of the Marginal Field Development Company is a logical progression from the strategic partnership which existed for three years. During that period, the business model has been refined and proven, projects and licenses have been acquired and it has become imperative to demonstrate that ABT Oil and Gas has a 'delivery partner' for its projects," Enegi Oil Chief Executive Alan Minty said.
Enegi Oil shares were up 2.9% at 6.175 pence Thursday. John Wood Group shares were down 0.1% at 784.5 pence.
By Steve McGrath; stevemcgrath@alliancenews.com; @SteveMcGrath1
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