OPINION: Blink at the moment and it seems you'll miss a UK North Sea asset deal.
This week Cairn Energy agreed to sell to Waldorf Production its 20% interest in Premier Oil’s Catcher field and its 29.5% stake in the EnQuest-operated Kraken field for $460 million plus a contingent payment linked to oil price and production performance.
Waldorf also farmed in to exploration acreage around the Ithaca Energy-operated Alba area.
Also this week, HitecVision-backed Neo Energy agreed to buy fellow private equity funded operator Zennor Petroleum in a deal valued at up to $625 million.
That followed hot on the heels of Neo’s deal last month to spend $1 billion-plus on a big package of ExxonMobil’s non-operating UK North Sea interests.
The flurry of deals has even prompted analysts at consultancy Wood Mackenzie to describe the UK North Sea as “one of the hottest markets globally”, buoyed by the recent recovery in prices.
Neivan Boroujerdi, WoodMac’s principal analyst for Europe upstream said the “blockbuster” start to the year has seen spending reach $2.7 billion, already surpassing last year’s total.
“Despite the UK’s maturity, the deals highlight the attractiveness of the country’s relatively low headline tax rate, which enables assets to generate significant free cash flow at current prices,” Boroujerdi said.
WoodMac estimates another $5 billion-worth of assets could change hands this year.
There have been plenty of predictions of the North Sea oil and gas industry's demise in the past decades.
If nothing else, 2021 continues to prove just how resilient the sector is.
(This is an Upstream opinion article.)