North Sea operator Orcadian Energy has sold a 50% stake in HALO Offshore UK Ltd to power plant developer Independent Power Corporation (IPC).
Orcadian acquired the shares of HALO Offshore UK in December last year from the joint liquidators of its parent company Hague and London Oil plc (HALO).
HALO previously held several licences in the Southern North Sea, including in the Pegasus and Andromeda fields and the depleted Schooner field.
The firm does not currently hold any licences after it collapsed in 2022, leaving shareholders as much as £18 million out of pocket.
Orcadian said it intends to seek production acquisition opportunities for HALO alongside IPC, with a “preference for low-emissions, non-operated, gas producing licences”.
Since 2013, Orcadian said HALO has incurred around £50 million of pre-trading capital expenditures.
The firm said it expects this will generate, on commencement of a ring-fence trade, tax allowances in the region of £115 million.
In addition, Orcadian said IPC has entered into a loan agreement with HALO for up to £539,000 so that HALO can evaluate and negotiate gas producing licence interests.
HALO has reimbursed Orcadian for costs incurred on behalf of HALO and IPC.
Meanwhile, Orcadian has pledged its share of HALO as security for its 50% share of this loan.
Orcadian said IPC has also agreed to provide, or procure the provision of, non-dilutive funding of at least £5 million.
IPC has also agreed to provide, or procure the provision of, additional dedicated funding lines to finance acquisitions, Orcadian said.
IPC chief executive Peter Earl and Mark Preece, founder and owner of Oil Gas and Marine Ltd, will join Orcadian chief executive Steve Brown and chief financial officer Alan Hume on the board of HALO Offshore UK.
Orcadian and IPC
The HALO deal comes shortly after Orcadian farmed out a 50% stake in a sub-area of its Earlham and Orwell developments to an IPC subsidiary, Marine Low Carbon Power Company (MLCP).
The deal was signed for $2.2 million, with $1.4m payable on completion.
MLCP aims to use gas from the sites to power onshore battery projects and its Mobile Offshore Generating Unit (MOGU) product with incorporated carbon capture and storage.
The MOGU fits a gas turbine to the development to produce what Orcadian described as “carbon free energy”. This power is then exported back to shore via subsea cables.
HALO Offshore UK
HALO was formed in 2014 via a reverse acquisition by Wessex Exploration.
Following its takeover of Tullow, HALO purchased Third Energy Offshore via an all-share transaction in 2018.
The deal reportedly diluted the interests of previous shareholders by some 19.25%.
The acquisition included stakes in exploration prospects such as Pegasus and Andromeda.
It later relinquished its non-operated Pegasus stakes in 2020, though the remaining partners Neptune Energy and Spirit Energy subsequently agreed to equalise their equity in Pegasus and take the project forward.
In May 2021, HALO sold all its Dutch assets to Rockrose Energy – a subsidiary of London-headquartered Viaro – offloading the portfolio owing to “greatly increased abandonment liabilities” and “relative under performance.”
The package comprised interests in the Joint Development Area (JDA), fields adjacent to the JDA, the Northern Area, the Western Gas Transport (WGT) pipeline and processing plant at Den Helder, and the WGT Extension pipeline.
The acreage covered about 2,800 sq. km and the assets generated average net production of 2,198 boepd in 2019.
Following the sale in 2021, the company said it was “evaluating opportunities within Europe for renewable energies” including onshore geothermal and offshore carbon capture and storage.
To do so, it said it would retain its interests in The Philippines as it examined the potential for geothermal energy production.
It also said the Schooner field on licence PL2578 could be redeveloped or used as a carbon capture and storage (CCS) site.
