Dutch oil services company SBM Offshore N.V. (SBFFF. PK, SBFFY.PK) on Tuesday agreed for an upfront settlement payment of $470 million with Talisman Energy Norge AS, a unit of Canadian oil and gas firm Talisman Energy Inc. (TLM, TLM.TO), as they have reached a decision to terminate the YME MOPUstor project in Norway. Following the news, SBM Offshore shares climbed around 20% in early afternoon trading in Amsterdam.
Under the settlement, the companies would scrap the existing above surface structure, and end all joint activity. Subject to the payment, Talisman will complete the work necessary to ensure the safe re-manning and will then remove the Mobile Offshore Production Unit or MOPU from the Yme field. SBM Offshore will manage the transportation and ultimate scrapping of the facility.
SBM Offshore, which provides floating production solutions to the offshore energy industry, noted that the decision has been taken to remove the MOPU following an extended period of operational and execution delays. MOPU will subsequently be scrapped. Ownership of the in situ subsea structure will be transferred from SBM Offshore to the Yme license holders, as they assess alternative development concepts for the field.
All parties will terminate the existing agreements and arbitration procedures with respect to the YME project, the company added.
Paul Warwick, Executive Vice-President Europe-Atlantic, Talisman, said, "Delays to first production on the Yme project have been a great disappointment to the Yme joint venture partners. Recent analysis has concluded that a new topsides solution is needed in order to develop the Yme field. The arrangement with SBM Offshore allows the Yme joint venture partners to continue to evaluate options for the Yme field."
Sietze Hepkema, member of the Management Board of SBM Offshore said, "Today we have resolved the legacy difficulties of Yme at an agreed cost, bringing an end to a period of significant uncertainty for the company. We are confident that with an FPSO-focused strategy and our industry-leading technological skills, SBM Offshore can take full advantage of the strong long-term fundamentals in our markets."
In Amsterdam, SBM Offshore shares are currently trading at 12.93 euros, up 2.22 euros or 20.67 percent, on a volume of 10 million shares.
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