Analyst firm Wood Mackenzie has predicted more firms could exit the UK North Sea in 2024.
Canada’s Suncor and China’s Sinopec bowed out of the UK sector last year, while Kuwait’s KUFPEC left the Norwegian sector.
“There are (a) few other obvious exit candidates left”, Wood Mackenzie said in a research note.
‘Obvious candidates’ for North Sea exits
CNOOC of China was named as one of the potential firms to depart.
The state-owned energy firm put its planned sale of the UK business on hold in early 2023 after initial offers didn’t meet expectations.
“A sale could be more likely in 2024,” said Wood Mac.
It was reported in January 2023 that the sale could have been valued at as high as $3bn.
While the initial offers didn’t meet expectations, it was said by people familiar with the matter that a sale could resume once conditions improve.
CNOOC is the operator of the Buzzard field, one of the UK’s highest-producing oilfields, with a 43.2% stake. It also operates the Golden Eagle and Scott platforms among stakes in other sites.
Who else?
© Supplied by DCT/ Kami Thomson“Apache, ExxonMobil and KNOC (Dana Petroleum) are also regularly tipped as exit candidates,” said the research firm.
Exxon Mobil, while no longer an operator in the UK, has various North Sea stakes through its Esso JV with Shell.
Apache has decided not to invest in new drilling – infill or exploration – and analysts have already tipped the firm for a sale.
Dana Petroleum, meanwhile, plans to shut down its Western Isles field in March, eight years ahead of its initial plans, while the FPSO heads to the Buchan field redevelopment operated by NEO Energy.
It had planned a sale of its Dutch business to Waldorf Production, which was later deemed “impossible” by the latter, over issues including tax and decommissioning commitments.
Elsewhere, Harbour Energy unveiled plans to acquire the global business of Germany’s Wintershall DEA, which is expected to complete in Q4.
Could private equity exit?
“Those that have sat on the M&A sidelines will re-engage or maybe call time as growth strategies stall,” said Wood Mackenzie.
“The Majors will continue to optimise upstream portfolios and could take a more active role in new energies opportunities.
“There is still room for consolidation, particularly in the UK, to improve scale and diversity.”
Among the changes to expect in 2024 is Italian major Eni completing its takeover of private equity-backed Neptune Energy early in the year.
PE moves could also impact NEO Energy in the UK and Sval in Norway, both owned by Norway’s HitecVision.
“Private equity backers near the end of investment timelines will look to monetise – could HitecVision get creative with vehicles NEO Energy and Sval Energy?”, Wood Mac asked.
According to data from the firm, deal spend of around $10bn is expected in 2024, the highest since 2021.
