OPINION: Neo Energy's deal this week to buy a chunk of non-operating assets in the UK North Sea from ExxonMobil for more than $1 billion is yet another significant move for the ageing basin.
The US supermajor, like many of its compatriots, is in the process of bringing down the curtain on around five decades of oil and gas production off the UK, where it pioneered the development of the country’s offshore sector in a long-running 50:50 partnership with Shell.
ExxonMobil still retains interests in the ageing southern North Sea, although it remains to be seen how long it will be before those assets are also put up for sale.
For the North Sea industry, private equity backed Neo’s rapid growth raises interesting possibilities.
And — following not long after Chrysaor’s reverse takeover of Premier Oil, creating arguably the first large-scale independent since Enterprise Oil — it also comes at a time when the North Sea’s commercial landscape is changing rapidly.
Now with about 70,000 barrels per day of overall production, the deal immediately propels Neo high up the list of UK continental shelf operators in terms of daily output.
Neo’s backer, HitecVision, has deep pockets and has made no secret of its hopes of repeating in the UK the success it found with Vaar Energi, which in three years has become the second-largest producer on the Norwegian continental shelf.
Neo’s UK buying spree will almost certainly not end at the ExxonMobil assets. Just watch this space.
(This is an Upstream opinion article.)