AN oil firm backed by international financiers is ramping up expansion in the North Sea with a deal worth up to $280 million amid the shakeup in the area.
Neptune Energy has agreed to buy the North Sea portfolio amassed by Italian energy firm Edison, which has decided to quit the oil and gas business to focus on renewables.
The deal will give Neptune a stake in a discovery in the UK North Sea that has generated huge excitement in the oil and gas industry.
Biggest find in more than decade shows still lots to go for in North Sea
The portfolio Neptune is acquiring includes a 25 per cent interest in the Glengorm find east of Aberdeen. This is estimated to contain 250 million barrels oil equivalent.
When the find was announced in January it was described by experts as one of the biggest made on the United Kingdom Continental Shelf for more than a decade. It was welcomed as a sign that there is still lots to go for in the UK North Sea.
Neptune Energy chief executive Jim House said Glengorm offered significant potential for the longer term.
The acquisition will also give Neptune stakes in the producing Scott and Telford fields in the Central North Sea off Scotland and interests in three gas fields off England.
The portfolio includes interests in two multi-million barrel development projects in the Norwegian North Sea.
Mr House said the acquisition was an important move that was in line with the firm’s strategy of consolidating its position in key areas with high quality and complementary assets.
Big bet on North Sea paying off for international financiers
The deal provides an example of how international financiers have capitalized on the upheaval in the North Sea to build big businesses focused on the area in recent years.
The sharp fall in the crude price from 2014 prompted some firms to sell off North Sea assets to raise cash to invest in what they see as more promising areas or to reduce debt.
Some energy firms that had built North Sea businesses to help secure supplies of oil and gas decided they had better prospects in areas such as renewables or the sale of energy to consumers.
Founded by Sam Laidlaw, who used to run giant utility Centrica, Neptune secured backing from international private equity firms including Carlyle Group and CVC for a plan to capitalise on the opportunities created following the oil price fall.
North Sea oil and gas independents generate momentum in area
It has built a significant North Sea position helped by acquisitions, including the purchase of the oil and gas business developed by French utility Engie for around £3.9 billion in 2017. This gave it a stake in the massive Cygnus gas field, which came onstream in 2016.
Neptune has encouraged hopes that such transfers of ownership will help boost activity in the UK North Sea.
The firm bought interests in the Seagull and Isabella field from America’s Apache last year. It approved plans to develop the Seagull field in March.
Mr Laidlaw is likely following developments at Centrica with interest.
Centrica said in June that it expected to sell its majority stake in the North Sea-focused Spirit Energy business by the end of 2020 via a trade sale.
Neptune has agreed to buy Edison’s North Sea portfolio from Energean, which is focused on the Mediterranean. Energean beat off competition from Cairn Energy to buy Edison’s oil and gas portfolio with an offer valuing it at up to $850 million. The bulk of the Edison assets are in the Mediterranean and the Nile Delta.
Cairn Energy moves into Israel
Neptune will pay an initial $250m with up to a further $30m payable if development plans for Glengorm and Isabella win regulatory approval.
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