The announcement that Cairn Energy will buy Nautical Petroleum is good news for an already buoyant North Sea, coming hot on the heals of Cairn’s acquisition of Agora Oil and Gas.
There are two significant attractions in Nautical Petroleum in our view. The first is its 15% stake in the North Sea Catcher area, which includes the Catcher, Burgman, Carnaby and Varadero oil discoveries. By taking over Nautical, Cairn will increase its overall interest in this particular area to 30%. The attractions here were given a boost last week, with the successful drilling of Carnaby – the sister well to Catcher.
Nautical also has a stake in the Kraken field, where again we see good long-term prospects.
Kraken has, of course, been the subject of much deal activity of late, with EnQuest purchasing a 25% stake from Nautical and a 15% interest from First Oil. We would not rule out further activity in this area going forward. The deal for Nautical appears to represent good value for Cairn, given that Kraken, Catcher and Mariner are all close to field development approval.
Alan MacPhee is an investment manager at financial planning and wealth-management specialist Brewin Dolphin in Aberdeen