Stratic Energy sells Italian assets and reports lower production at West Don
06 November 2009
Oil and gas group Stratic Energy has sold its Italian operations to Enel Trade SpA in a cash deal worth €34.3 million (£30.8 million).
The news comes as the AIM and TSX listed group said production levels from its West Don assets in the UK North Sea were set to come in lower than expected this year.
The sale to Enel involves Stratic's entire portfolio of assets in Italy, including its interest in the Longanesi gas field and other exploration acreage in the country.
The consideration will see Enel assume all of Stratic’s existing obligations relating to the assets. Stratic is also entitled to receive a further payment of €6.6 million as long as first production takes place before the end of 2011.
Kevin Watts, Stratic's president and chief executive, said the company was delighted with the sale of its Italian business and would use the cash to reduce net debt further, strengthen the balance sheet and provide resources for future investment.
The lower than expected performance from West Don is likely to see production dip to approximately 1.75 million barrels of oil (Stratic’s share is 0.30 million barrels), compared with previous estimates of 2.1 million barrels. The reduction reflects continuing gas lift and water injection performance below expectation.
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