OilVoice - Petrofac Announces Proposed Demerger to Create EnQuest PLC

Petrofac Announces Proposed Demerger to Create EnQuest PLC

Thursday, March 04, 2010

The Board of Petrofac today announces its intention to demerge Petrofac Energy Developments Limited ("PEDL") from the Petrofac group and combine it with the UK Continental Shelf oil & gas assets of Lundin Petroleum AB ("Lundin") to form a new company, EnQuest PLC ("EnQuest") (the "Demerger"). PEDL is the subsidiary within Petrofac's Energy Developments business unit which holds Petrofac's UK Continental Shelf assets, including a 27.7 per cent. interest in the West Don field, a 60 per cent. interest in the Don Southwest field (of which 5 per cent. is held through PEDL's subsidiary, Petrofac Energy Development Oceania Limited ("PEDOL")) and a 100 per cent. interest in the Elke discovery (together the "PEDL Assets").

Following the Demerger, EnQuest will be an independent oil & gas production and development company whose activities will be focused on the UK Continental Shelf. EnQuest shares (the "EnQuest Shares") will be admitted to the Official List and to trading on the main market for listed securities of the London Stock Exchange (the "London Admission") and will be admitted to trading on NASDAQ OMX Stockholm via a secondary listing").

Following the Demerger, Petrofac shareholders will own 100 per cent. of the Petrofac New Shares in issue (which will constitute the entire share capital of Petrofac following the Demerger) and approximately 45 per cent. of the issued EnQuest Shares as at the date of completion of the Demerger. Lundin shareholders will own approximately 55 per cent. of the EnQuest Shares following the Admissions and the planned distribution of EnQuest Shares to
Lundin shareholders.

Petrofac Energy Developments
Petrofac, through its Energy Developments business unit, seeks to invest in oil & gas development, production, processing and transportation assets and to leverage the extensive engineering and operations capability of the Petrofac
group.

The Petrofac Energy Developments business unit operates a "build and harvest" strategy and, having maximised the value to be added from the application of its services capability, believes that it is an appropriate time to consider realisation options for its assets in the UK Continental Shelf. Following the Demerger, Petrofac will continue to focus on being a leading international provider of facilities solutions to the oil & gas production and processing industries. Equally, the Energy Developments business unit will remain a key constituent of Petrofac's business portfolio, and will continue to hold significant assets including Chergui (Tunisia), Cendor (Malaysia), Ohanet (Algeria), the Krygz Petroleum Company refinery (Krygz Republic) and the Floating Production Facility (FPF1). Petrofac continues to look for further opportunities in which the Energy Developments business unit can invest and bring to bear the Petrofac group's services to add value for itself, its partners and its shareholders.

Creation of EnQuest
Once the Demerger has been effected, EnQuest will be an independent oil & gas production and development company whose activities will be focused on the UK Continental Shelf. EnQuest intends to deliver sustainable growth in shareholder
value by exploiting the reserves it will hold, commercialising and developing discoveries, converting contingent resources into reserves and pursuing selective acquisitions.

EnQuest believes that the UK Continental Shelf represents a significant hydrocarbon basin in a low risk region. The UK Continental Shelf continues to benefit from an extensive installed infrastructure base and skilled labour to develop, operate and manage assets. EnQuest's management have considerable experience of working in the UK Continental Shelf region and are familiar with the regulatory authorities and competitive landscape.

With a portfolio of producing assets, development opportunities and appraisal and exploration opportunities, strong cash flow generation and an experienced management and staff that have a proven development and operating record, EnQuest believes that it will be well positioned to increase its production and and benefit from the opportunities that exist in the UK Continental Shelf.

On completion of the Petrofac STA, Amjad Bseisu will step down from his role as Chief Executive of the Energy Developments business unit and as a Director of Petrofac and become Group Chief Executive of EnQuest. Following Mr Bseisu's departure, Ayman Asfari (Group Chief Executive, Petrofac) will, for an interim period, oversee the Energy Developments business unit, supported by Robert Jewkes, currently Managing Director, Energy Developments, and Gordon East, currently Managing Director, Production Solutions.