There are several “deals to watch” in the UK North Sea in 2024 as a general election looms and companies reshuffle their positions.
Analyst firm Westwood Global Energy Group said the UK is a “buyer’s market”, with several acquisition opportunities but a small pool of buyers.
“Some deals to watch include the conclusion of the Shell and ExxonMobil SNS portfolio sale, TotalEnergies rationalising its UK portfolio (e.g. sale of Laggan Tormore), and farm-out processes for Rosebank and Cambo” the firm said.
TotalEnergies
It was reported in September that TotalEnergies (XPAR: TTE) was looking to sell its remaining stake in the Greater Laggan Area.
That move followed a 20% offload of the West of Shetland production base in 2022 to Kistos for £125m plus contingent payments.
Viaro Energy and Ineos each hold a 20% stake in the fields.
TotalEnergies has been weighing up investment decisions in the West of Shetland.
Partner Kistos has been “ready to sanction” the 100m barrel Glendronach discovery and the Edradour West project.
However operator TotalEnergies seemed to pour cold water on that in September, citing the “cost environment and the lack of predictability on fiscal terms” making FID challenging.
Shell and Exxon
Last year it was reported Shell (LON: SHEL) and Exxon Mobil (NYSE: XOM) were seeking the sale of a large package of southern North Sea assets in the UK and Dutch sectors.
Those include the Clipper Leman Alpha Complex and the Bacton Terminal in Norfolk.
The proposed sale has been viewed as part of oil giants’ general move from ageing oil and gas in favour of new projects.
Weeks later, Shell was awarded a trio of carbon capture and storage licences in the southern North Sea.
Analysts said the asset sale made strategic sense as it could help fund CCS expansion.
Cambo: ‘A key milestone could be reached’
Farm out processes for the two largest and most controversial projects in the UK sector are also on the cards this year – Cambo and Rosebank.
Shell exited the Cambo oil project in the West of Shetland in September, making operator Ithaca Energy (LON: ITH) 100% owner, despite hopes for another buyer when a sales process was launched in May for Shell’s stake.
Westwood Global pointed out that a “key milestone” could be reached as the licence renewal date approaches on 31 March.
“Ithaca could take FID in 2024 to hold on to the licence”, said Westwood.
The hunt for a new partner continues.
Rosebank
Meanwhile the search is on for another firm to partner on the Rosebank field.
Reuters reported in November that Equinor was preparing to sell a 20% stake in the field, hoped to fetch around $1.5bn.
Equinor has an 80% stake in the project – the largest development in UK waters – after acquiring Suncor’s UK portfolio in 2023.
Harbour Energy
Westwood also pointed to Harbour Energy’s (LON: HBR) $11.2bn deal to acquire the assets of Germany’s Wintershall DEA.
Due to close in Q4, it shows “international growth ambitions” for Harbour, which is currently the UK’s largest oil and gas producer, as around 50% of the portfolio being taken on is in Norway.
Questions linger over closure of the deal as Germany voices unrest – read more here.
North Sea deals – big players in Norway
Overall the value of of deals in 2023 was higher than 2022, in part down to Harbour, said Westwood.
“The outlook for M&A activity in 2024 is expected to remain tight. Norway has a relatively low number of companies in operation on the shelf, with fewer opportunities coming onto the market than other countries in the region, such as the UK where the maturity of the basin and a higher number of players leads to a greater number of opportunities.
“Some larger players, however, could rationalise their portfolios; Equinor may continue to sell its equity in its higher emission assets, Aker BP could look to reduce its non-core assets, and PGNiG and Sval Energi are likely to continue searching for incremental growth opportunities as they build their Norwegian portfolios.”
Recommended for you
