CALGARY - Talisman Energy Inc. has reached a deal with its contractor to cancel its problematic Yme project in the Norwegian North Sea and dismantle the above-surface part of the offshore platform.
"This is a good settlement for Talisman, the Yme partners and Norway," Talisman executive vice-president Paul Warwick said Tuesday.
"This arrangement should allow the partners to move forward to examine options for the Yme field, without incurring significant additional costs related to the existing topsides."
Topside refers to the part of the platform that's above the water line.
"Recent analysis has concluded that a new topsides solution is needed in order to develop the Yme field," said Warwick. "Our first priority will be to remove the existing platform, safely and expeditiously."
The deal will see Netherlands-based contractor SBM Offshore make an upfront payment of US$470 million while Talisman completes the work to remove the mobile production unit from the Yme field.
SBM said it has accounted for $200 million of that amount in December, and will charge the remainder to its first-half 2013 results.
The undersea structure will be transferred from SBM to the Yme licence holders.
SBM will manage the transportation and ultimate scrapping of the facility.
The settlement ends an arbitration process Talisman had been pursuing at the same time it was working on a deal with SBM. The matter would have taken years to be resolved under arbitration, Warwick said at Talisman's investor day last week.
The Yme platform has been unmanned since last July, when it was evacuated due to safety concerns.
The North Sea generally has been one of the more challenging parts of Talisman's portfolio, beset by operational problems and production misses.
The region used to be one of Talisman's three core operating areas, but under the leadership of new CEO Hal Kvisle, the company has removed it from that list. It recently sold a 49 per cent interest in its U.K. North Sea properties to Chinese state-owned firm Sinopec.
The firm now has two core operating areas: Asia Pacific and the Americas, which encompasses shale oil and gas across North America and Colombian oil fields.
Talisman's shares rose 15 cents to $12.59 in mid-day trading on the Toronto Stock Exchange.