{"id":2638,"date":"2023-12-04T00:56:14","date_gmt":"2023-12-04T00:56:14","guid":{"rendered":"https:\/\/economicherald.net\/?p=2638"},"modified":"2023-12-04T00:56:14","modified_gmt":"2023-12-04T00:56:14","slug":"hartshead-resources-clears-the-path-to-develop-uk-gas-fields-saves-costs-along-the-way","status":"publish","type":"post","link":"https:\/\/economicherald.net\/?p=2638","title":{"rendered":"Hartshead Resources clears the path to develop UK gas fields, saves costs along the way"},"content":{"rendered":"<p>Hartshead Resources secures option to divest a further 20% in Somerville and Anning for an uncapped free carry on Phase 1 development costs<br \/>\nOption provides certainty for joint venture to progress Phase 1 to FID<br \/>\nDiscussions are continuing into financing options for company to retain its 40% interest<\/p>\n<p>\u00a0<\/p>\n<p><strong><em>Special Report:<\/em> Hartshead Resources has further de-risked Phase 1 development plans for its UK Southern Gas Basin assets after negotiating an option with farm-in partner RockRose Energy that covers 100% of its costs.<\/strong><\/p>\n<p>The company\u2019s UK Southern Gas Basin assets consist of four discoveries and 14 identified prospects, with <a href=\"https:\/\/stockhead.com.au\/resources\/hartshead-submits-field-development-plan-with-clear-pathway-to-phase-1-gas-development\/\"><strong>Phase 1<\/strong><\/a> focused on bringing the previously producing Somerville and Anning fields back online.<\/p>\n<p>Somerville and Anning have combined proved and probable reserves of 301.5 billion cubic feet of gas.<\/p>\n<p>Six production wells will deliver production peaking at about 140 million standard cubic feet per day (MMscf\/d) from 2025 into\u00a0two wireline capable normally unmanned installation platforms that will, in turn, transport gas to Shell\u2019s infrastructure for onward transportation and processing for sale.<\/p>\n<p>Given the UK\u2019s goal of reducing its dependence on imported gas, the attractiveness of the Phase 1 development enabled <a href=\"https:\/\/stockhead.com.au\/company\/hartshead-resources-hhr\/\"><strong>Hartshead Resources (ASX:HHR)<\/strong><\/a> to rope in RockRose Energy as its <a href=\"https:\/\/stockhead.com.au\/energy\/hartshead-steps-closer-to-production-after-completing-uk-gas-field-farm-out\/\"><strong>farm-in partner<\/strong><\/a>.<\/p>\n<p>Under the original agreement, RockRose \u2013 an existing North Sea oil and gas producer and subsidiary of Viaro Energy \u2013 agreed to pay the company $196.3m in return for a 60% interest in the project licences and paying its share of costs for the Phase 1 development, which secured over $536m of gross project expenditure.<\/p>\n<p>\u00a0<\/p>\n<h2><strong>Road to FID clear<\/strong><\/h2>\n<p>The two companies have now amended the farm-in agreement to include an option for HHR to divest a further 20% in the project licences for an uncapped free carry over the total costs of the Phase 1 development.<\/p>\n<p>While HHR is not required to exercise the option, it provides certainty for a final investment decision, on the basis of RockRose financing the project.<\/p>\n<p>Exercising the financing backstop option would increase the total committed project funding to over $800m.<\/p>\n<p>Should the company retain its 40% interest in the project licences, it will receive a Phase 1 cash bonus of $54.7m in work program carry.<\/p>\n<p>\u201cThe execution of the amendments to the farm-out agreement and joint operating agreement with RockRose, allows us to advance the Phase I development of the Anning and Somerville gas fields by securing the option of an uncapped carry for our interest of the project,\u201d HHR chief executive officer Chris Lewis said.<\/p>\n<p>\u201cHartshead is in a unique position as it has the added ability of being able to retain its 40% interest via alternative financing, whilst ensuring it is now able to progress to take final investment decision and progress towards project development, now that it has a financing backstop provided.<\/p>\n<p>\u201cThe joint venture team between Hartshead and RockRose has integrated exceptionally well over the last few months and I would like to personally thank RockRose for their support in the joint venture on licence P2607 and the significant progression of the Phase 1 development.\u201d<\/p>\n<p>Viaro chief executive officer Francesco Mazzagatti said he was pleased with the restructuring of the farm-in agreement as it provided certainty over Anning and Somerville being fully funded to completion.<\/p>\n<p>\u201cGiving our partner the option of a financing backstop ensures stability for the JV, a particular challenge for North Sea operators nowadays with the shrinking pool of traditional capital providers for E&amp;P opportunities,\u201d Mazzagatti said.<\/p>\n<p>\u201cWith the amendments in place, we can now confidently proceed to the FID. I am grateful to the Hartshead team for a smooth and seamless cooperation at every stage of our developing partnership.\u201d<\/p>\n<p>\u00a0<\/p>\n<h2><strong>Project debt discussions continuing<\/strong><\/h2>\n<p>HHR is continuing to pursue the option to introduce project debt and maintain its current 40% equity interest in Licence P2607.<\/p>\n<p>It noted that discussions with funding providers suggest the project is maintaining a conservative target debt level, which could see the company funded through its estimated share of development costs.<\/p>\n<p>Financing instruments being considered include:<\/p>\n<p>Reserve-based lending (RBL);<br \/>\nCorporate\/Nordic bonds;<br \/>\nPrepayment\/commodity offtake facility; and<br \/>\nInfrastructure funds.<\/p>\n<p>\u00a0<\/p>\n\n<p><span class=\"mce_SELRES_start\">\ufeff<\/span>\u00a0<\/p>\n<p><em>This article was developed in collaboration with Hartshead Resources, a Stockhead advertiser at the time of publishing. <\/em><\/p>\n<p><em>\u00a0<\/em><\/p>\n<p><em>This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.<\/em><\/p>\n<p><span class=\"et_bloom_bottom_trigger\"><\/span><\/p>\n<p>The post <a href=\"https:\/\/stockhead.com.au\/energy\/hartshead-resources-clears-the-path-to-develop-uk-gas-fields-saves-costs-along-the-way\/\">Hartshead Resources clears the path to develop UK gas fields, saves costs along the way<\/a> appeared first on <a href=\"https:\/\/stockhead.com.au\/\">Stockhead<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"<p>Hartshead Resources secures option to divest a further 20% in Somerville and Anning for an uncapped free carry on Phase 1 development costs Option provides <a href=\"https:\/\/economicherald.net\/?p=2638\" class=\"read-more-link\">[more&#8230;]<\/a><\/p>\n","protected":false},"author":0,"featured_media":2639,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-2638","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.5 - 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