Spanish energy firm Repsol confirmed it was in talks over potential “transactions” with Talisman yesterday as analysts said it could be looking at buying assets rather than the whole company.
The Madrid-based firm has identified the US, Canada, Norway and “other OECD countries” as targets for potential deals as it looks for ways to spend a £3billion war chest it received following the nationalisation of its assets in Argentina.
Calgary-based Talisman has been clear it intends to sell its assets in the North Sea including its joint venture with Sinopec, raising speculation the Spanish firm could look to become a UKCS operator.
Currently the firm is an active explorer in the Norwegian North Sea. But it is mainly involved in development of offshore wind farms in the UK, including a 25% stake in the massive Beatrice project in the Moray firth through its subsidiary, Repsol Nuevas Energías UK.
But UKCS transactions, particularly of mature assets such as those being sold by Talisman, have dropped in the second quarter along with exploration as the North Sea industry “takes a breath” ahead of regulatory and fiscal regime change, a recent report warned.
Talisman and Shell are both selling significant mature fields while Marathon Oil recently scrapped plans to sell its North Sea operations. BG too is through to have put its Armada, Lomond and Everest platforms up for sale.
The lull in assets sales comes as the UKCS faces spiralling costs and awaits changes to the industry resulting from the Wood Review and the ongoing review of the North Sea fiscal regime, Deloitte has said.
Graham Sadler of Deloitte said there was no shortage of buyers for North Sea assets but it was a question of price – currently there is a “expectation gap in prices” where bids fail to meet seller’s expectations, the firm said.
“There is a concern about what price you pay for assets,” Sadler said.
“There is an appetite for the North Sea but it is in one of those periods where there are a lot of moving parts.
“There is mileage in some of these significantly older fields but you have to go in with your eyes wide open with these assets and be certain there is some upside and model that upside in a market that is more stable.”
He said government confirmation of tax breaks for North Sea operators expected in November could be the key to a pick up in deals.
“The autumn is going to be an interesting period for the North Sea as we see what fiscal incentives are proposed and seeing if that starts to unlock activity which we would hope to see.
“There is a need for new ownership and ingenuity and new ideas to come in.”
Spain’s largest oil producer recorded a second-quarter profit of £310million compared to last year’s £320million as rebel hostilities in Libya halted production hitting the firm’s profits hard.
However, outside the conflict-ridden country production rose by 5%.
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