Vermilion Energy Inc. has announced completion of the sale of Shell Overseas Holdings Limited's 45% interest in the Corrib Natural Gas Project in Ireland to Nephin Energy Holdings Limited (NEHL), a wholly owned subsidiary of Canada Pension Plan Investment Board (CPPIB), and the transfer of operatorship to Vermilion. NEHL has acquired 100% of Shell E&P Ireland Limited, which holds 45% interest in Corrib.
Effective immediately, Vermilion has assumed contract operatorship of Corrib on behalf of the joint venture partners. CPPIB plans to transfer SEPIL along with a 1.5% working interest to Vermilion. This transfer has received all required government approvals and is expected to be completed in the coming weeks. The estimated purchase price after interim period adjustments is approximately €6 million.
Following the transfer to Vermilion, ownership in Corrib will be as follows:
- Vermilion will hold a 20% operated interest
- NEHL will hold a 43.5% non-operated interest
- Equinor (formerly Statoil) continues to hold a 36.5% non-operated interest
Vermilion's incremental 1.5% ownership of Corrib represents approximately 700 boe/d at current production rates and approximately 1.8 million boe of 2P reserves based on an independent evaluation by GLJ Petroleum Consultants Ltd. with an effective date of December 31, 2017. Based on a final purchase price of €6 million ($9.1 million at current exchange rates), the transaction metrics are estimated at approximately $13,000 per boe per day, $5.05 per boe of proved plus probable reserves including future development capital (generating a 2P recycle ratio of 9.4 times based on projected 2018 netbacks), and 0.7 times estimated 2018 operating cash flow using the current forward commodity strip. Vermilion expects the acquisition to be accretive for all pertinent per share metrics including production, fund flows from operations, reserves and net asset value. In addition, Vermilion expects to receive approximately €13 million of net working capital with the transfer of SEPIL.
Following the assumption of operatorship of Corrib, Vermilion estimates that it will operate 89% of its global production base as compared to 81% prior to the transaction.