Cairn Energy has become the latest established oil company to sell UK North Sea assets to a relative newcomer, as the area undergoes a further significant change of ownership.
The Edinburgh-based company has sold its stakes in the Catcher and Kraken fields for $460m in cash to Waldorf Production, a company headed by Erik Brodahl, who has lengthy experience in the oil and gas-focused private equity industry. Investec analyst Nathan Piper said the sale price was ahead of his $350m valuation.
The sale of Cairn’s 20 per cent holding in Catcher and 29.5 per cent stake in Kraken — both of which started producing oil in 2017 — is the latest in a flurry of UK North Sea deals as more established players continue to pull back from the ageing basin to focus on lower cost regions elsewhere.
US oil major Exxon last month sold a group of North Sea assets to Norwegian private equity group HitecVision in a deal worth at least $1bn. HitecVision’s UK arm, Neo Energy, also this week purchased Zennor Petroleum, a small company backed by the private equity group Kerogen Capital, for up to $625m.
A new wave of North Sea companies — many of which were fuelled by private equity money — entered the UK North Sea after the oil price crash of 2014, eyeing an opportunity to snap up portfolios from majors who were either exiting entirely or selling off large bundles of non-core assets. Analysts have, however, questioned how these newer entrants might eventually exit their positions given the lack of appetite on public markets for fossil fuel companies.
Cairn, which acquired its minority interests in Catcher and Kraken in 2012, also on Tuesday proposed the acquisition of a group of assets in Egypt from Royal Dutch Shell, in partnership with Cheiron, Egypt’s largest independent exploration and production company. Cairn will pay $323m towards a total purchase price of $646m.
Cairn’s chief executive Simon Thomson said the Egyptian deal was an “important step in our strategic ambition to expand and diversify our producing asset base” while the sale of the North Sea assets “as they fall into natural decline, will further strengthen our ability to pursue Cairn’s strategic goals”.
Cairn last year won a high profile corporate tax dispute against the Indian government which should see the company receive $1.2 billion plus interest, although New Delhi is yet to pay up.