Page 4 - Euroil Week 03 2020

EurOil COMMENTARY EurOil
Private equity pair collect final bids for North Sea venture
Private equity firms entered the North Sea during the market downturn, buying assets cheaply that they hoped could be developed and sold at a premium after prices recovered
NORTH SEA
WHAT:
Blackstone and Blue Water Energy have reportedly collected final offers for North Sea-focused Siccar Point Energy, which they set up in 2014.
WHY:
Private equity firms are now looking to withdraw from the mature region, following on the heels of the majors.
WHAT NEXT:
Smaller independents and new international players will replace them, snapping up assets at bargain prices.
PRIVATE equity firms Blackstone and Blue Water Energy have collected final bids for their NorthSeaventureSiccarPointEnergy,Bloomb- erg reported this week, as the region gears for another year of high M&A activity.
According to the news agency, the pair have received offers from UK producer Chrysaor Holdings, Norway’s Equinor, Canada’s Suncor Energy, China’s CNOOC and a private equity firm backed by HitecVision.
Blackstone and Blue Water Energy estab- lished Siccar Point in 2014 and built the busi- ness up through a series of major takeover deals, including the $1bn acquisition of OMV’s UK division in 2016.
Today, Siccar Point has six projects in the UK North Sea and West of the Shetlands, and pro- duces around 10,500 barrels of oil equivalent per day (boepd). But output is projected to reach as high as 80,000 boepd by the end of the decade.
Blackstone and Blue Water do not want to stick around to see this growth, having launched a sale of Siccar Point last year with the aim of raising $2-3bn. The pair have been disappointed by the market’s appetite, however, with many of the bids they have received being lower than expected, Bloomberg sources said. Some poten- tial buyers were only interested in acquiring
some of Siccar Point’s assets, suggesting the busi- ness could be sold piece by piece.
Theywilldecidewhethertopushaheadwith a sale after completing their evaluation of the offers, according to Bloomberg.
Blackstone and Blue Water were among a number of private equity firms to enter the North Sea during the market downturn. Their goal was to acquire assets cheaply that could be developed and then sold off at a premium when prices recovered.
The market has remained weak for far longer than initially anticipated, however, while finan- cial investors have grown more reluctant to invest in fossil fuel production. As such, many operators looking to exit the North Sea may have to offer potential buyers a bargain.
A hot spot for deals
Edinburgh-based Wood Mackenzie predicts that the North Sea will remain a “hot spot” for deal-making.
“The buzz that saw $15bn worth of assets change hands in the North Sea last year – despite global activity falling to its lowest level in two decades – will continue into 2020,” Wood Mac- kenzie’s North Sea upstream analyst Neivan
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w w w. N E W S B A S E . c o m Week 03 23•January•2020