Page 5 - EurOil Week 10 2021

EurOil COMMENTARY EurOil

Cairn is parting with the Premier-operated recovery in prices.”
assets, as they are set to begin their decline later In just over two months, deals worth $2.7bn
this year, less than four years after their launch. have already been reached, exceeding the total
Cairn produced 21,000 barrels of oil equivalent for last year.
per day from its share in the fields in 2020, but “Despite the UK’s maturity, the deals high-
predicts output will fall to 16,000-19,000 boepd light the attractiveness of the country’s relatively
in 2021. low headline tax rate, which enables assets to
“The divestment of our UK producing assets generate significant free cash flow at current
as they move into decline phase will further prices,” WoodMac analyst Neivan Boroujerdi
strengthen our ability to pursue Cairn’s strategic said. “We estimate up to another $5bn worth of
goals and position the company robustly for the assets could change hands this year.”
decade ahead,” Cairn CEO Simon Thomson said The list of sellers is broad, according to the
on March 9. The company on the same day said Edinburgh-based consultancy, with super-ma-
it had reached a deal to buy interests in a number jors continuing to divest and more private equity
of onshore fields from Royal Dutch Shell for up firms like Zerogen seeking to get a return on
to $926mn. their investment.
Waldorf CEO Erik Brodahl said the deal at “The sale of private equity-funded Zennor
Catcher and Kraken would be “transforma- doesn’t come as a surprise,” Boroujerdi said. “Its
tional” for the company. The firm has also agreed backer Kerogen was nearing the end of its five-
on the purchase of interests in UK blocks 22/1b year investment cycle and having recently sold
and 22/1a from Ithaca Oil and Gas. The former its stake to Energean, this was likely to follow.”
block contains the Fotla prospect, where drilling Eyes are also on when Premier and Chrysaor
is scheduled to start on an exploration well in the will complete their merger, which has already
second quarter of 2021. secured all necessary shareholder approvals. The
“Waldorf sees the North Sea as uniquely combined entity, Harbour Energy, will become
suited for disciplined small-cap E&P companies the UK’s biggest producer.
such as ourselves with well-managed, long-life On the Cairn sale, Boroujerdi said its new
assets available at attractive valuations,” Brodahl deals would “shift its hydrocarbon split towards
said. “We continue to look for further growth gas while retaining its balance sheet strength,
opportunities in the near term.” which was bolstered by last year’s sale of Sango-
mar in Senegal.”
A blockbuster start “Newcomer Waldorf Energy will be looking
Wood Mackenzie commented on the latest to replicate the growth of some other private
transactions, saying they continued “what has equity-backed players that have shaken up the
been a blockbuster start to the year for UK M&A, shelf in recent years,” he continued. “These latest
with buyers (and sellers) buoyed by the recent deals suggest another passing of the torch.” ™

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