Private equity-backed oil and gas venture Siccar Point Energy announced its first North Sea investment on Aug. 16 and said it planned to do more deals over the next year as cash-rich firms step up activity after a two-year rout in the sector.
Siccar Point, headed by Jonathan Roger, a former Centrica executive, and backed by private-equity firms Blue Water Energy and Blackstone, acquired a 8.9% stake in the U.K. North Sea's Mariner Field from Japan's JX Nippon.
Several private-equity funds, such as Carlyle Group and CVC Partners, have joined forces with veteran energy executives in recent years to form companies seeking to snap up assets around the world amid the sharp drop in oil prices.
Siccar Point also announced on Aug. 16 the appointment of former BG Group CEO Chris Finlayson as chairman.
These cash-rich companies are likely to play a growing role in the aging North Sea Basin where oil and gas companies have struggled in recent years to sell assets.
Recent signs of a rebound in oil prices, coupled with abundant assets on sale around the world, have revived appetite for M&A around the world, with companies including Exxon Mobil Corp. (NYSE: XOM) and Norway's Statoil ASA (NYSE: STO) making major deals in recent weeks.
"Mariner provides our business with a great platform to build on with a 30-year producing asset particularly with the anticipated recovery in oil prices," Roger told Reuters.
Although Siccar Point, created in August 2014, has reviewed nearly 100 different assets available in the North Sea, it is focusing on fields with a long remaining production life which it can preferably operate and control costs, Roger said.
"We're highly focused over the next 6 to 12 months to get some other substantial investments made."
Mustafa Siddiqui, managing director at Blackstone, said Siccar Point has an official line of equity of $500 million but has further access to debt as well as more than $8 billion Blackstone has allocated for energy investment.
"The Mariner acquisition is just the first step in hopefully a long string of acquisitions of high quality assets," Siddiqui told Reuters.
After sellers' and buyers' price ideas for assets diverged significantly in 2014 and 2015, the bid-ask spread is narrowing as both sides agree on the outlook for the oil price, Siddiqui said.
"Companies are starting to have a more realistic view of assets and that tends to facilitate deals."
The Mariner heavy oil field in the East Shetland region of the North Sea is operated by Statoil and is expected to begin production in 2018. About 80% of its development has been completed, Roger told Reuters.
JX Nippon Exploration and Production (U.K.) Ltd. will retain a 20% stake in the field following the deal.
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