North Sea dealmaker ready to raise acquisition stakes as shake up in area continues

“Every deal we’ve done so far has been bigger than the last so watch this space,” said Mr Austin.

Underlining RockRose’s determination to be a material North Sea player, Mr Austin said the Marathon deal has increased directors’ confidence in a strategy which has involved using acquisitions to build a big business rapidly.

The deal gave RockRose control of significant production operations centred on the Brae area and Foinaven fields off Scotland. Its output is expected to increase to 24,000 barrel oil equivalent per day as a result, from 11,000 boepd .

Mr Austin, 53, is at the helm of an operation that generates large amounts of cash and has the staff resources required to develop and operate fields.

Highlighting the profitability of the production RockRose acquired with the Marathon portfolio, Mr Austin noted: “We’ve got Ebitda profits now of $200 million a year at current oil price; that’s a very material amount of cash flow to support doing things.”

He added: “There’s a significant amount of cash on our balance sheet as well.”

Mr Austin has no doubt that RockRose can integrate the assets acquired from Marathon, which brought with them a team whose members have plenty of experience of operating fields.

He notes members of the executive team at London-based RockRose have experience of integrating a range of businesses, including some he acquired while running onshore shale specialist IGas.

Since founding RockRose in 2015 Mr Austin has led on five acquisitions.

The progress achieved has left him convinced he was right to launch a North Sea- focused business just as other firms hurried to exit the area.

The plunge in the crude price from 2014 prompted many firms to slash investment in the North Sea. However, Mr Austin felt it created an opening following his departure from IGas in May 2015.

“It became apparent that there were a number of people whose holdings in North Sea assets were no longer core to them. That created an opportunity to basically amalgamate those into a package that became material,” recalled Mr Austin.

He noted RockRose’s decision to focus on unloved producing assets, rather than taking the traditional route of starting with exploration operations and building up from there, has paid off.

“It gives us a ruthless focus on being able to do deals with people who may want country exit or can’t necessarily fund their way through a development situation.”

RockRose has kept busy on the deal front throughout an upheaval in the North Sea which has gathered momentum amid the partial recovery in the crude price from early 2016.

This has left some international private equity firms ready to deploy billions to help firms complete mega deals while international buyers such as Israel’s Delek have developed an increasingly keen interest in the area.

In recent months America’s Chevron and ConocoPhillips have sold North Sea portfolios in deals worth $2bn and $2.7bn respectively in order to focus investment on US shale fields.

A range of firms have more or less exited the North Sea but Mr Austin does not think the change in the area has run its course.

“There’s always people that are prepared to deal at a price,” he observed.

“There’s private equity buyers who have their own buttons they need to press, there’s public company buyers who also have their own buttons they need to press.”

Noting that RockRose had “probably been more successful than most in closing things and identifying opportunities”, Mr Austin said the firm would consider smaller deals as well as big ticket transactions.

He has not been deterred by the fact Independent Oil & Gas rebuffed an approach about a possible £27m bid in March, amid some acrimony.

“There’s a good and healthy future in the North Sea,” said the former investment banker, adding: “We look forward to being part of that.”

He thinks RockRose is playing its part in the official drive to maximise the recovery of the North Sea’s resources.

The company has delayed the expected decommissioning date of assets it has acquired while being a supportive partner for investing in these and in developing fields.

Mr Austin thinks gas will play an increasingly important part in the energy mix amid the drive to reduce carbon emissions. Onshore gas has a role to play, in spite of some people’s concerns about the associated risks.

“In terms of the way it’s been presented to the public some of the case studies which would have supported it like the activities of IGas … have not been relied on as much as they should have done, by some of the proponents; that would have given the public a much higher level of confidence. In a post-Brexit world it might become much more important again.”

Mr Austin’s energy industry experience also includes running solar power operations in California.

He spent years in the City after joining an old-style jobbing firm as a lowly “Blue Button” from school before the Big Bang regulatory shake up of 1986.

When not busy working the father of five prioritises spending time with his family at home in his native Hampshire.

But trips to Aberdeen to oversee RockRose’s growing North Sea operations are likely to become increasingly frequent in coming months.

Q&A

What countries have you most enjoyed travelling to, for business or leisure, and why?

I enjoy being in the Caribbean, but have just got back from hiking in the Swiss alps with my wife.

When you were a child, what was your ideal job? Why did it appeal?

Having been rejected by Oxbridge universities to read maths, because I didn’t have an O-Level in a foreign language, I started working in the City on the floor of the Stock Exchange at the age of 18. I loved the buzz of the markets.

What was your biggest break in business?

Co-founding IGas.

What was your worst moment in business?

Personal attacks and having my integrity questioned by anti shale protestors and shareholders alike while running IGas.

Who do you most admire and why?

Jim Ratcliffe of Ineos for making a world class business out of unloved assets (and seemingly not giving a damn).

What book are you reading and what music are you listening to?

Machines like us by Ian McEwan. Music, the same stuff as I was listening to in the 1980s and anything by my son Brandon Rivers.

What was the last film you saw?

Avengers: End game with my wife and five kids.