LONDON (Alliance News) - Shares in Serica Energy PLC rocketed Tuesday after the company secured US approval to continue operating a North Sea field jointly with Iranian Oil Co, thereby avoiding sanctions and potential supply crunch in the UK.
Serica Energy shares were up 35% at 104.22 pence each in London following the announcement.
The company's unit Serica Energy (UK) Ltd and BP PLC have received a conditional license and assurance from the US Office of Foreign Assets Control relating to the UK North Sea Rhum field.
Serica Energy is in the process of buying BP's stake in Rhum field. It is also buying stakes in two other North Sea fields - Bruce and Keith fields - from Total E&P UK Ltd, a unit of French oil giant Total SA.
"Subject to the fulfilment of the conditions, the license will allow certain US and US-owned or controlled entities to provide goods, services and support involving Rhum. OFAC has also provided an assurance that non-US entities providing goods, services and support involving Rhum will not be exposed to U.S. secondary sanctions," Serica said, adding that the US decision will enable production from the Rhum field to continue unaffected.
The OFAC licence is valid until October 31, 2019, but may be renewed on application by Serica UK assuming the conditions continue to be met.
Serica said the US licence conditions stipulate that all benefits from Iranian Oil's interest in the Rhum field to be held in escrow while US sanctions apply and that Iranian Oil will not derive any economic benefit from the Rhum field during the sanctions period. Iranian Oil also will have no decision-making powers in respect of Rhum during the sanctions period.
"This outcome protects a valuable British asset which, together with the Bruce and Keith fields, produces about 5% of UK offshore gas production. Serica is now able to move forward to completing the BP and Total transactions, allowing us to focus on optimising the full performance of the Bruce, Keith and Rhum fields, extend production life where possible and ensure maximum economic recovery of remaining reserves to the UK's benefit," said Serica Chief Executive Mitch Flegg.
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