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PETROFAC and Swedish independent petroleum company Lundin are to spin off their oil assets in the North Sea to form a separate company.

EnQuest was recently incorporated by the two companies, and will hold the UK oil and gas production, development and exploration assets and operations of both Lundin and Petrofac subsidiary Petrofac Energy Developments. It has been estimated to have a potential value of $1b. Shares in EnQuest will be distributed to current Petrofac (45%) and Lundin (55%) shareholders. The new company’s activities will be focussed solely on the UK’s continental shelf under the North Sea.

EnQuest’s assets from Petrofac will include a 27.7 % interest in the West Don field, a 60% interest in the Don Southwest field and a 100% interest in the Elke discovery, and from Lundin, interests in the Heather, Broom, Thistle and Deveron fields and the Peik, South West Heather and Scolty discoveries. In 2009 these assets had an output of 13,620 bbl/d.

EnQuest will operate as an entirely separate company from both Petrofac and Lundin, although these will initially provide transitional services until the end of 2011. The companies will share no directors. Amjad Bseisu, currently chief executive of Energy Developments at Petrofac and a company director will step down from these positions to be ceo of EnQuest.

“EnQuest has a strong staff and asset base having been formed from the UKCS assets of Petrofac and Lundin. We are confident that the combination of these assets, along with our staff, provides us with the skills, scale and financial strength to become one of the UK's leading independent oil and gas production and development companies,” says Bseisu.

The demerger is subject to approval by shareholders. The companies hope to complete the transaction early in Q2 of 2010.