Page 5 - EurOil Week 08 2021

EurOil COMMENTARY EurOil

ExxonMobil “represents a major step towards partner John Knight commented. “We have
NEO’s near-term target of producing 120,000 built one of Norway’s largest oil and gas compa-
boepd,” the company said. nies, through our joint venture with Eni, in Var
After the deal’s completion, NEO will have Energi. We believe that NEO has the potential
shares in 35 fields. It intends to pay for the pur- to achieve a similar position in the UK sector.”
chase, which includes a $1bn sales price and up HitecVision will continue funding NEO’s
to $300mn in contingency payments based on growth through more acquisitions and mergers,
future oil and gas prices, using funds from Hitec- he said.
Vision and a $2bn reserve-based lending facility
underwritten by BNP Paribas, DNB, ING and North Sea M&A
Lloyds Bank. The UK North Sea is seen as ripe for consolida-
“This acquisition builds on NEO’s existing tion, given the strain that producers have been
North Sea portfolio and towards delivering on under since oil prices collapsed early last year.
our ambition to be a leading producer on the Indeed, it is somewhat surprising that there
UK Continental Shelf [UKCS],” NEO CEO Russ has not been greater consolidation already. The
Alton said. “NEO is well placed, together with number of producers in the region has remained
its operating partners, to extract value from broadly the same, despite output falling substan-
this and other opportunities, while at the same tially in the past two decades and two market
time focusing on improved environmental downturns in the space of the last seven years.
performance.” M&A activity was limited in 2020 owing to
Parent HitecVision has already accumulated the impact of the pandemic, but the market is
a number of former ExxonMobil assets. Its Point now showing signs of picking up. North Sea
Resources subsidiary bought the Jotun, Balder players Chrysaor and Premier Oil are close to
and Ringhorne assets off Norway from the US fulfilling all conditions to complete their tie-up,
major in 2017. HitecVision later merged Point while a number of operators are understood to
with Eni’s Norwegian operations in 2018 to form be initiating sales processes. The last major deal
Var Energi. Eni controls 69.6% of the company, reached before the ExxonMobil-NEO transac-
while HitecVision has 30.4%. Var Energi then tion was in December, when SEE agreed on the
acquired the rest of ExxonMobil’s Norwegian sale of its non-operated shares in 15 producing
business in late 2019 for $4.5bn. UK deposits to Viaro Energy for GBP120mn
HitecVision clinched another deal last month ($164mn).
to buy the Norwegian assets of Italy’s Edison for Now that market conditions have stabilising,
$284mn, through another vehicle called Sval with coronavirus (COVID-19) numbers drop-
Energi. ping and vaccination programmes expanding,
“HitecVision is a leading investor in the Euro- operators are likely to agree sales terms with
pean offshore energy industry with $6.7bn in more confidence, as the outlook is more predict-
assets under management,” HitecVision senior able than it was nine to 12 months ago. ™

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