Page 4 - EurOil Week 10 2021

EurOil COMMENTARY EurOil

North Sea consolidation

wave continues

It has so far been a blockbuster year for M&A activity in the North Sea

UK THE wave of North Sea consolidation looks merger of the Verus Petroleum and NEO E&P
set to continue, with two more major deals investment vehicles belonging to HitecVision. It
WHAT: announced this year. bought a group of Total assets in the UK North
Kerogen and Cairn Private equity fund manager Kerogen Capi- Sea last year.
have announced major tal has agreed terms to sell its Zennor Petroleum Zennor and Kerogen have established a
divestments in the North unit to NEO and its Norwegian backer HitecVi- “portfolio of long-life, high-margin assets with
Sea. sion for up to $625mn. significant further growth potential,” Kerogen
Zennor, formed in 2015, controls assets in the said. “With the Finlaggan development nearly
WHY: Britannia field area as well as the Eastern Trough complete, we believe this is an opportune time
Recent M&A activity is Area project, controlling 4mn barrels of reserves to monetise our investment and realise an
supported by the price and 90mn barrels of contingent resources. Its attractive outcome for our investors, while leav-
recovery. flagship new development is the Finlaggan gas ing room for NEO to deliver the next phase of
and condensate field, whose launch has been portfolio growth in synergy with their existing
WHAT NEXT: pushed back until the fourth quarter of 2021. assets.”
Eyes are on when Premier The deal comes weeks after NEO clinched a
and Chrysaor will deal to buy a package of North Sea assets from Cairn sale
complete their merger. ExxonMobil for $1bn. The two transactions are Meanwhile, UK energy group Cairn Energy
set to raise NEO’s output to around 80,000 bar- has announced the sale of a 20% interest in
rels per day in 2021, from the current 30,000 bpd, the Catcher and 29.5% interest in the Kraken
and up to 90,000-100,000 bpd in 2022-2026. North Sea fields to Aberdeen-based Waldorf
“This transaction provides a further imme- Production for $460mn. The deal also includes
diate uplift to NEO’s production and resource uncapped contingency payments, depending
base with several high-quality follow-on devel- on oil prices over the next five years. These pay-
opment opportunities,” NEO CEO Russ Alton ments will amount to $75mn if Brent averages
commented. $60 per barrel between now and the end of 2025,
NEO is young company, born out of the 2019 and $125mn if it trades at $65 per barrel.

P4 www. NEWSBASE .com Week 10 11•March•2021