Sector News

The flight from the North Sea continues

March 24, 2015
News
E.on, the German energy giant, is preparing to pull out of the North Sea, exacerbating an exodus of explorers from the region as it battles a slump in oil prices.
 
The company is planning to offload around £1bn worth of fields off the coasts of Scotland, England, the Shetland Islands and Norway.
 
More than £6bn worth of North Sea assets are already up for sale, according to oil and gas consultancy group 1 Derrick, with major oil groups Total, ConocoPhillips, BP and Shell already working on plans to pull out in the wake of slumping oil prices.
 
E.on has instructed Bank of America Merrill Lynch to find potential buyers for the assets. It is understood the company is still deciding whether to sell them in one chunk, or take a more piecemeal approach. E.on is keen to keep its interests in Russia, sources say.
 
Sources say potential buyers include new UK exploration & production company Siccar Point Energy, led by Jonathan Roger, Centrica’s former oil chief.
 
The vehicle, set up last year to pursue opportunities in the UK continental shelf, has financial backing from Wall Street private equity giant Blackstone and Singapore’s sovereign wealth fund GIC.
 
KKR and Warburg Pincus, which raised $4bn last October for a fund dedicated to investments in the energy sindustry, are said to be scouring the opportunities in the North Sea.
 
In November, E.on announced a radical shake-up of its sprawling empire and said it would split the company in two by spinning-off its fossil-fuel power plants into a separate company.
 
The reorganisation came after E.on’s chief executive said that its existing business model could “no longer properly address” the challenges of weak energy demand, low wholesale prices and Germany’s switch to wind and solar power.
 
The move follows a deal by German rival RWE to sell its €5.1bn oil and gas unit to Russian billionaire Mikhail Fridman.
 
Total is looking to sell a 20pc stake in its flagship Laggan-Tormore deepwater gas field west of the Shetland, Shell is looking at selling “significant parts” of its Anasuria, Nelson and Sean Fields, ConocoPhillips is considering options for its 24pc stake in BP-operated Clair field while independent EnQuest is offloading a 20pc stake in Kraken, according to 1Derrick.
 
By Ashley Armstrong
 

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