Trap Oil Group (Trapoil) aims to cash in on a £60million-plus private-equity swoop on the North Sea.
The firm has struck a deal with Prostar Capital, under which it plans to identify and evaluate potential company acquisitions and orphaned asset investment opportunities.
In return, London-based Trapoil has an option to acquire a stake of up to 5% in any business or asset acquired.
It will also receive 2.5% of the value of any deals done, plus a further conditional 2.5% of the value of any future disposal of businesses or assets acquired.
In an update on current operations, Trapoil said: “Prostar’s management believes that there is considerable value in the North Sea, and has established a substantial fund targeted at acquiring undervalued assets and companies in the region.”
A spokeswoman for Trapoil said the fund was already worth “north of $100million”, or £60million.
The agreement has an initial duration of six months, with Trapoil having an option to extend subject to mutual consent.
Prostar is an Australia-based private equity firm with links to Korean conglomerate, SK Group.
North Sea-focused Trapoil was founded only seven years ago.
Its business model is to partner with major oil industry companies and use its technical expertise to identify opportunities for acquiring exploration and appraisal interests – in return for a stake.
The firm also has a 15% working interest in the Athena field, in the outer Moray Firth.
In its latest update, the firm said: “Trapoil’s management is in the process of determining how best to create value from the group’s existing cash reserves and assets while minimising risk for shareholders.
“Following extensive discussions both with existing and potential new partners, the company announces certain initiatives which it believes will significantly strengthen Trapoil’s position in the North Sea.”
The company said revised terms with Suncor Energy UK for the central North Sea Romeo discovery would give it a majority stake in the “potentially high value” asset.
Trapoil currently owns 22.5% of Romeo but that will rise to more than 73% if the conditional deal, which is subject to various approvals, goes ahead.
Partners in the prospect include First Oil, with a 15% stake, and Total Exploration and Production UK (11.875%).
Trapoil chief executive Mark Groves Gidney said: “The agreements entered into with Suncor and Prostar have the potential to generate significant value for Trapoil over the coming years.
“The Prostar agreement in particular could deliver significant growth in our offshore portfolio.
“With other projects and potential new business streams currently at an advanced stage of negotiation, we look forward to an exciting next phase in the group’s development.”
Prostar, which has offices in the US, Australia and Hg Kong, was founded in 2010 to take advantage of opportunities created by the changing dynamics of global energy supply demand.
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