EnQuest has agreed to buy a 25 per cent stake in BP's Magnus oil field and surrounding assets in the North Sea in "a natural evolution of EnQuest's business".
The oil producer said it will also take over operations of Sullom Voe on the Shetland Islands, which is Britain's largest oil terminal.
This deal is part of EnQuest's strategy of "realising value from the management of maturing oil fields", chief executive Amjad Bseisu said. The company aims to buy cheap interests in older fields and use new technologies and strict spending programmes on them.
"Magnus is a good quality reservoir; it has large volumes in place, with potential for infill drilling and for the revitalisation of wells, and scope for field life extension. It is a producing asset that would materially increase EnQuest's reserve base," he added.
Bseisu told Reuters EnQuest will reduce costs at Sullom Voe by around £150m a year so it can run it for longer. It will keep all 340 BP staff at the Magnus field and the Sullom Voe terminal, he said.
EnQuest, which is one of the UK's largest independent oil gas producers in the North Sea, has struggled since the commodity price crash, which put pressure on the finances of oil and gas explorers. In October, it said it wanted to raise funds of £82m as part of a proposed restructuring.
EnQuest also has the option to buy BP's remaining 75 per cent stake in Magnus and other interests by 15 January, 2019 for $300m, the companies said in a statement, which Bseisu said would increase the company's oil reserves by around 30 per cent.
In a trading update today, the company said production was up 8.7 per cent in 2016, averaging 39,751 barrels per day (bpd), with production in the UK North Sea up 11.3 per cent – EnQuest's highest annual production since the company started in 2010.
In 2017, EnQuest expects to average between 45,000 bpd to 51,000 bpd, mainly due to the start of its Kraken field.