Page 10 - Euroil Week 11 2020

EurOil INVESTMENT EurOil
TechnipFMC stalls split amid market chaos
UK
The oilfield services firm is still committed to the move, however.
UK oil services firm TechnipFMC has delayed plans to separate itself into two independent businesses because of the coronavirus (COVID- 19) crisis, it said on March 16.
“Market conditions have changed materi- ally due to the coronavirus pandemic, the sharp decline in commodity prices and the heightened volatility in global equity markets,” the company said in a statement. “The impacts of these events have created a market environment that is not cur- rently conducive to the company’s planned sepa- ration into TechnipFMC and Technip Energies.”
Technip Energies is expected to handle engi- neering and construction, while the remainder of TechnipFMC will provide integrated technol- ogy and services. TechnipFMC took a decision to split into two separate, publicly traded com- panies last August, three years after its formation as the world’s only fully integrated subsea pro- vider through the merger of Technip and FMC Technologies.
Oil and gas prices have inexorably fallen in recent months as COVID-19 has spread across the world, putting billions of dollars of upstream projects at risk. Markets became even more bear- ish after OPEC+ talks on output cuts collapsed
earlier this month, prompting Saudi Arabia to declare a supply war against its competitors. Benchmarks are currently trading at only around $30 per barrel.
Despite the delay, TechnipFMC said the stra- tegic rationale for separating itself remained sound.
“The company is committed to the transac- tion and continues its preparations to ensure that the two companies are ready for separation when the markets sufficiently recover,” it said.
Like numerous companies in the oilfield ser- vices sector, TechnipFMC is preparing to cut staff and implement other cost-saving measures to weather the oil market downturn. The com- pany reported a growth in fourth-quarter profit to $3.7bn in late February, up from $3.3bn in the same period of 2018, reporting unprecedented numbers of subsea orders. But it swung to a net loss of $2.4bn all the same, versus a $2.3bn loss a year earlier.
TechnipFMC’s first-quarter order sheet will be affected by recent capital spending reduc- tions by oil and gas producers. The company will report its results for the three-month period on April22.™
PERFORMANCE
UK M&A activity up 59% in Q4
UK
Only two of the five major transactions related to sizeable assets in the UK.
MERGER and acquisition (M&A) activ- ity in the UK oil and gas industry totalled $1.75bn in the fourth quarter, according to GlobalData, up 59.3% versus the previous three months but down 32.3% from the last four-quarter average.
The UK accounted for a 2.8% share of global oil and gas M&A in the quarter, which amounted to $63.54bn. The country saw 33 deals closed in the three months, up 17.9% quarter on quar- ter but down 2.9% compared with the last four-quarter average. Five major transactions were worth $1.64bn, or 93.4% of the UK’s total. And only two of them related to sizeable assets in the UK.
Nigeria’s Seplat Petroleum Development acquired Aberdeen-based Eland Oil & Gas for almost $597mn, expanding its upstream foot- print in Nigeria. Meanwhile, London-based shipping firm Stolt-Nielsen finalised the $416mn sale of 20 chemical tankers to Shanghai-based CMBFL, as well as a leasing agreement for the vessels. Latin American upstream independ- ent GeoPark also bought UK-based Amerisur Resources, which is focused on the same conti- nent, for $314mn.
UK-based Neptune Energy also acquired the North Sea business of East Mediterranean-fo- cused Energean Oil & Gas, for $280mn, and US-based oilfield services group Seacore Marine sold its North Sea standby business to UK-based North Star Holdco for $32mn.
The North Sea was a major hotspot of M&A activity in 2019, but deals mostly took place in Norway rather than in the UK. The biggest trans- action of the year in the UK was London-based Chrysaor’s $2.68bn takeover of ConocoPhillips’ offshore UK assets, closed in September. Among the major pending deals are Premier’s agree- ments with BP and South Korea’s Dana Petro- leum to acquire stakes in a number of North Sea fields for $870mn.
Private equity firms Blackstone and Blue Water Energy earlier this year collected bids for their North Sea venture Siccar Point Energy, having initially hoped to raise $2-3bn. US major ExxonMobil is also looking for options to exit UK waters as part of broader withdrawal from Europe’s upstream sector, while fund man- ager Kerogen Capital was reported in October to be seeking offers for its Zennor Petroleum business.™
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