A brand new North Sea exploration and production company Siccar Point Energy has been set up by a team led by Jonathan Roger, ex of Centrica and Venture Production, with a $500million war-chest.
Backers are affiliates of Blue Water Energy and Blackstone Energy Partners, who have agreed an initial investment of up to $500million in the company. They are to be joined in the investment by the Government of Singapore Investment Corporation (GIC).
The key architect of the finance package is a North Sea investment veteran, who will be remembered by many in the UK offshore industry for successfully building 3i’s energy portfolio.
Graeme Sword resigned from 3i in 2009 after 14 years. He is a founder/partner of Blue Water Energy, which was
established in 2011. He is keen to build another sizeable oil and gas-related portfolio.
Siccar Point Energy, headquartered in Aberdeen, draws its name from a rock formation in Berwickshire made famous by geologist James Hutton.
The company has a two-prong strategy.
Initially, it will focus on UK sector opportunities where a host of assets are currently for sale, a number of which are likely to be attractive in what is currently a buyer’s market.
The team, some of whom are heritage Venture in which 3i together with ArcLight took a sizeable stake interest in 2007, has considerable expertise in managing large, complex assets in the UKCS while adopting innovative technologies and strategies to unlock the maximum commercial hydrocarbon potential.
The company will also have a strong North Sea exploration focus that targets the best returns taking account of both technical and fiscal factors. The initial emphasis will be the Norwegian sector where there are tax reliefs designed to encourage exploration drilling.
Roger is the former MD of Centrica Energy Upstream, where he led the business from early 2010 following the acquisition of Venture at which he was the chief operating officer ahead of the take-out.
Roger has been working in close collaboration with Blue Water Energy since he left Centrica last year to engineer Siccar Point’s business plan, and was joined by Blackstone in early 2014.
At Siccar Point, he is being joined by a highly experienced team, including Iain Bartholomew as subsurface director, Doug Fleming as finance director and David Sheach as general counsel.
The firm’s senior management team has worked together over the last decade through tenures at Venture Production and Centrica Energy Upstream.
Roger told Energy: This is a great time to build a business in the North Sea for a well-capitalised and experienced team with a focused strategy.
“It is a period during which some of the largest upstream companies are cutting back on capital expenditures and consolidating their global asset portfolios.
“We see some attractive valuations. We’re going to be a North Sea-focused full-cycle E&P business . . . exploration, development and production.
“That could involve infill drilling, near-field development, near-field exploration . . . looking to build two or three production hubs. That’s where our early focus is going to be.
“We’re not necessarily looking at late life assets and squeezing out the last few barrels. We’re looking at assets where we can perhaps put significant capital to work, getting after the remaining potential of the right assets.
“We believe that selective capital deployment and efficient operations can deliver attractive returns in this environment. I am delighted to have such strong and experienced investors supporting our business.”
Roger confirmed that Siccar Energy is hunting in a buyer’s market, which would enable the company to pick and choose.
“For me it’s about patience; looking for the right deal, not a quick deal. We’ve got a significant level of capital behind us with investors that understand the E&P stakes. We have a very strong operations record as a team.”
Sword said: “E&P is a key part of our fund strategy. We have a strong belief that there are continuing opportunities in the North Sea for well managed companies with a clear strategy and access to capital.
“We have worked with Jonathan to build the plan and are very pleased to be joined by Blackstone as our partner in Siccar Point.”
Blackstone has invested approximately $7billion of equity in the energy sector over the last decade.
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