UK OIL exploration and production company EnQuest is planning to raise $138 million (£107m) via a rights issue in order to fund its acquisition of the remainder of the Magnus oil field.

In January, London-listed EnQuest acquired an initial 25 per cent stake in the field - situated 100 miles north of Shetland - from BP.

Under the terms of the transaction, EnQuest also had the right to increase its stake in Magnus to 100%, with the option exercisable at any time between July 1 this year and January 15 next year.

Yesterday, the firm announced to the stock exchange that it would be acquiring those assets as well as increasing its interests in related production facilities such as the Sullom Voe terminal on Shetland.

It is seeking to raise money from shareholders to meet $100m of the $300m cost of the acquisition.

EnQuest chief executive Amjad Bseisu said the business had decided to exercise the option because the deal was “compelling”.

“Our view of Magnus as a high-quality asset has been enhanced since acquiring our initial 25% interest through the successful completion of two infill wells and the application of our asset life extension expertise,” he said.

“We have also identified two further infill wells, both of which have very strong returns, to drill in 2019.”

While the rights issue will only cover a third of the cost of the transaction, BP will provide a vendor loan to EnQuest for the remainder of the sum, with the debt being repaid via a 50:50 cashflow-sharing agreement on the 75% Magnus interest.

EnQuest’s shares fell by as much as 14% when the issue was announced.