BARGAIN hunters who bought North Sea assets during the downturn may be sitting on big gains but investors that bought amid the preceding boom are more likely to have incurred losses, experts have found.
In an analysis of deal activity in the North Sea Wood Mackenzie found the value of assets bought for a total $52 billion between 2002 and 2018 had fallen to $43bn.
The Edinburgh-based oil and gas consultancy said of the 55 deals concerned only 18 had made a positive return.Senior analyst Neivan Boroujerdi noted that groups that acquired assets amid the crude price plunge that started in 2014 appeared to have done better than those that moved earlier.
“Value destruction was at its worst between 2012 and 2014 ... most buyers will have assumed higher oil and gas prices than have since been realised,” he noted, adding: “Opportunists that were willing to pull the trigger at the bottom of the market in 2015 and 2016 have benefited from the uptick in prices that followed.”
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Mr Boroujerdi also noted the importance of other factors, including the knowledge buyers had of the region and the strategies they followed. He said: “Those operators who took an ‘acquire-and-exploit’ approach – taking on under-loved assets, reducing costs and increasing investment – have seen results.”
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