European exploration and production (E&P) companies need a major discovery or acquisitions “to ignite” investor interest in the flagging industry, Tullow Oil Plc's (LONDON: LSE, OTC: TUWOY) CEO, Aidan Heavey, said.
“It’s been two years now in the doldrums, which is a long time,” Heavey said July 30 in a phone interview with Bloomberg. “The market here needs something to get it excited. It’s just kind of bored, there has been no real activity.”
The FTSE AIM Oil and Gas Index, which has 113 European explorers, fell about 28% in the last 18 months after some investors switched focus to U.S. petroleum companies. The SIG Oil Exploration & Production Index, with 21 North American members, was little changed in the period.
“It’s really a European thing, because it has picked up quite a lot in the U.S.,” where exploration companies “are trading at significant premiums,” Heavey said. “It will take something to ignite it and to get the interest back.”
Glencore Xstrata Plc’s $1.35 billion acquisition of Caracal Energy Inc. (OTC: CCAXF), a driller in Chad, and Qatar’s Al Mirqab Capital SPC’s offer to buy Heritage Oil Plc (TO: HOC.TO)for $1.5 billion along with some other deals in April and May encouraged some industry analysts, including Anish Kapadia from Tudor Pickering Holt & Co., to report investor interest in the European oil industry is reviving. Yet, investor sentiment hasn’t changed much, according to Premier Oil Plc's CEO, Tony Durrant.
There “is still skepticism, still some reluctance to reinvest cash” in Europe’s explorers, Durrant said in an interview at his office in London earlier this month. “There are some green shoots in investor sentiment. We can see some evidence that North American investors” started “to get a little worried about” valuations, he said. “It will be nice to think that some of that money is recycled into” the European explorers, Durrant said.
Recommended Reading
NOV Announces $1B Repurchase Program, Ups Dividend
2024-04-26 - NOV expects to increase its quarterly cash dividend on its common stock by 50% to $0.075 per share from $0.05 per share.
Repsol to Drop Marcellus Rig in June
2024-04-26 - Spain’s Repsol plans to drop its Marcellus Shale rig in June and reduce capex in the play due to the current U.S. gas price environment, CEO Josu Jon Imaz told analysts during a quarterly webcast.
US Drillers Cut Most Oil Rigs in a Week Since November
2024-04-26 - The number of oil rigs fell by five to 506 this week, while gas rigs fell by one to 105, their lowest since December 2021.
CNX, Appalachia Peers Defer Completions as NatGas Prices Languish
2024-04-25 - Henry Hub blues: CNX Resources and other Appalachia producers are slashing production and deferring well completions as natural gas spot prices hover near record lows.
Chevron’s Tengiz Oil Field Operations Start Up in Kazakhstan
2024-04-25 - The final phase of Chevron’s project will produce about 260,000 bbl/d.