* Private equity funds in talks to buy North Sea assets
* Recent rebound in oil prices accelerated process
* Sharp rise in number of assets for sale in 2015
By Ron Bousso
LONDON, May 15 (Reuters) - High-profile oil and gasexecutives are teaming up with private equity funds seeking toinvest billions in British North Sea assets and maximize profitsby cutting costs, offering the ageing basin a badly neededlifeline.
With an estimated $10 billion in their war chests, largefunds including Riverstone Energy, Carlyle Group and Blackstone are in talks to buy producing assets orinvest in struggling exploration and production (E&P) companies,several bankers and industry sources said.
The funds are hiring high-profile executive teams who willuse their experience to drive costs lower by introducingefficiencies and slash contractor costs at new assets.
Fresh investment in the North Sea has stalled in recentyears due to a relatively unfavourable tax regime. Output frommany fields has steadily declined since the basin's peakproduction in the 1990s.
Despite that, some assets remain highly attractive. These include the Laggan Tormore field, where France's Total is selling, and gas fields being put on the block by Russianbillionaire Mikhail Fridman's LetterOne fund.
"Private equity and other funds are beginning to make moreconcrete steps towards completing investments in the North Sea,"one source involved in such talks said.
In some cases, funds and executives are opting to create newvehicles to manage oil and gas fields such as Siccar Point,created late last year and headed by Jonathan Roger, a formerexecutive at Conoco and British energy supplier Centrica, andbacked by Blackstone and BlueWaterEnergy.
Another such fund is Aberdeen, Scotland-based VerusPetroleum, backed by Norwegian private equity fund Hitech Visionand headed by Alan Curran, a North Sea veteran with Wood Groupand Lundin Petroleum.
Some of the funds are also pursuing a more traditional pathby investing in struggling producing companies, introducing newchanged to their boards in order to lead a restructure andincrease profits using the experience of their management teams.
"As a result of recent M&A activity and corporaterestructuring, there are a number of C-level executivescurrently considering their options," said Emma Wild, UK Head ofUpstream Advisory at KPMG.
"With some Private Equity firms making little secret oftheir desire to invest in the European upstream sector, SiccarPoint backed by Blackstone and BlueWater as an example, marryingthis capital to management with a strong track record offers anopportunity for private equity firms to invest in what some arecalling the 'bottom of the cycle'."
Caryle, Riverstone, BlackRoch, Siccar Point and VerusPetroleum declined to comment.
STILL CHALLENGED
Investment in the North Sea remains challenged.
"The lay of the land is still difficult. It is a high-costbasin," Amjad Bseisu, Chief Executive Officer of North Seaproducer Enquest told Reuters.
"You will see incremental activities with fields that arenear the major hubs, but I do think we will see a continueddecline in investments in the United Kingdom and earlierdecommissioning of fields," he said.
Many oil companies, small and large, have put assets on theblock in recent months as part of a sector-wide cost cuttingdrive in the wake of the halving of crude price between lastJuly to early 2015.
Deal making nevertheless dropped sharply in the firstquarter of 2015 as the gap between buyers' and sellers' priceexpectations widened following the rapid decline in prices.
The near 40 percent price recovery since January is nownarrowing the gap, paving the way for new deals, according tothe sources.
Royal's Dutch Shell $70 billion bid for its smallerBritish rival BG Group announced last month was also seenas a catalyst for new deals, they said.
A total of 46 asset packages, which include dozens of oiland gas production fields and exploration blocks, are currentlyup for sale in the UK North Sea at an estimated total value of$5.9 billion, said Mangesh Hirve, managing director at 1Derrickconsultancy.
The number of assets offered has increased over the pastyear by more than 50 percent, Hirve said.
(Editing by William Hardy)
