Horse trading

Since the oil price began to fall in June last year, the North Sea has become one big horse-trading operation in waiting. But buyers and sellers have had a problem — finding a mutually agreeable price for the livestock on offer.

Fast moving prices, particularly in a downward direction, make pinning a valuation on anything difficult. Sellers might want out, but not at any price. Buyers hope to make their move at the best possible moment. The relative stability of the past couple of months, coupled with signs that oil prices might have found a floor, appears to have concentrated minds.

A trickle of smaller deals, such as Faroe Petroleum taking stakes in the Blane and Enoch fields, is turning into something more torrential. This week alone, Russian billionaire Mikhail Fridman’s oil and gas producer Dea got out of the UK North Sea and into Norway in two big deals — UK assets sold, under some duress, to Ineos; Norwegian assets bought from German utility Eon.

Norway’s Det Norske is continuing on its journey from small exploration-focused company into one of Europe’s largest independents, with a $75mn deal to buy a Swedish company’s local operations. Incremental that deal may be, but interesting to note Det Norske’s assertion of the buying power to come once the giant Johan Sverdrup field comes on line in 2019 — as its peers struggle with crimped cash flows, Det Norkse is sitting on a goldmine.

Israeli firm Delek last week spent $66mn on a 19.9pc stake in Ithaca, which operates the Greater Stella area where first oil is expected next year.

And more is in the offing. Polish firm Lotos said it may well unveil at least one acquisition in the coming days, taking advantage of falling prices and Norwegian tax breaks.

It is not just the indies looking for deals: the majors — the North Sea’s pioneers — are actively considering whether the high-cost region is still the place they want to be.

In July, Total agreed to sell a 20pc stake in the 90,000 b/d of oil equivalent Laggan-Tormore gas and condensate project in the UK to utility SSE for £565mn ($869mn). Big players Shell and BP have everything under constant review. So, is it a buyers’ market?

Maybe. Any decision to sell up, divest or pare back will be met with a ready pool of buyers. Private equity is bringing cash to the table — former Centrica chief executive Sam Laidlaw has teamed up with private-equity firms Carlyle and CVC Capital Partners to launch Neptune Oil and Gas, with a war chest of $5bn to fund acquisitions. Private equity-backed Siccar Point Energy has $500mn for North Sea acquisitions.

Maybe that makes it a sellers’ market? Or maybe it’s just the right market, and the right time. Whichever it is, the horse trading has begun in earnest.

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