UK North Sea 2016: Private Capital Drives M&A; Exploration Activity Flat

LONDON--()--1Derrick reports the M&A transactions in 2016 in UK North Sea at ~$1.4 billion, dominated by Private Capital. Blackstone and Blue Water backed, Siccar Point acquired OMV’s UK portfolio for $875 million.

“1Derrick estimates the exploration inventory to be high. UK North Sea has 32 ready to drill licenses with firm, decided or in-progress drilling and 16 licenses with planned wells. There also are 210 licenses for which drill or drop well decisions are yet to be made.”

Drilling has declined steadily from 41 wells in 2012 to 20 wells in 2015. After slow start, 16 E&A wells have been spud in 2016. 1Derrick estimates 5 additional wells spud before year end.

Private Capital drives UK North Sea M&A

1Derrick data shows that UK North Sea M&A remained slow during 2016 with the total deal value of only ~$1.4 billion. Mangesh Hirve, Managing Director, “With over $10 billion spent globally, Private Capital backed E&P acquisitions have dominated 2016, with $9 billion spent on US assets alone. In the UK North Sea, acquisitions backed by Private Capital stood at ~$1.1 billion on the back of the $875 million paid for OMV’s UK upstream portfolio by Siccar Point.”

Till date in 2016, UK North Sea transactions stood at 31 - 22 Fields and Discoveries, only 8 Farm-ins and just 1 Corporate.

Kerogen Capital, through Zennor Petroleum, acquired First Oil’s UK subsidiaries for $47 million and 30% in Hurricane Energy for $63 million. Siccar Point acquired 8.9% in Mariner oil field from JXN. Reach Halibut, formed by Larry Kinch and Miles Newman, acquired 40% in Premier Oil’s Bagpuss discovery.

Other significant deals in 2016 include Shell divesting 7.59% in Maclure field to Nobel Upstream, JXN selling 16% in Culzean field and 45% in Utgard field to BP and Statoil, respectively.

Darsh Shah, “Assets on the market in UK North Sea increased by 26% to ~$6.9 billion as DONG and Engie look to exit upstream business. Endeavour and Eni are also exiting North Sea. Significant assets on market by Majors include ConocoPhillips’ Clair oil field and Shell’s North Sea package including Buzzard, Schiehallion, Bressay etc.”

Exploration activity flat; Operators may push their planned wells

1Derrick research shows that Exploration activity remained flat with 16 E&A wells spud so far and 5 more spuds expected before year end. 11 licences have firm drilling commitments for 2016, which 1Derrick expects the operators to relinquish the licences or request an extension.

Discoveries in 2016 include Premier Oil's Bagpuss and Enquest’s Eagle. Zennor operated Finlaggan, Hurricane’s Lancaster and IOG’s long awaited Skipper appraisal emerged positive. Currently, 4 wells are in progress, operated by Apache, Hurricane, ConocoPhillips and Maersk.

Rajeev Singh, “1Derrick estimates the exploration inventory to be high. UK North Sea has 32 ready to drill licenses with firm, decided or in-progress drilling and 16 licenses with planned wells. There also are 210 licenses for which drill or drop well decisions are yet to be made.”

Contacts

1Derrick
Ajit Thomas
Ajit.Thomas@1Derrick.com
or
Mangesh Hirve
Mangesh.H@derrickpetroleum.com

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Release Summary

UK North Sea Private Capital drives M&A, Blackstone, Shell 7.59% Maclure field to Nobel Upstream, JXN 16% Culzean and 45% Utgard to BP and Statoil; Discoveries Premier Oil's Bagpuss Enquest’s Eagle.