RE: FT piece28 Apr 2019 23:52
In November last year, Serica completed a deal involving four complex transactions with BP, Total, BHP Billiton and Marubeni, the Japanese trading and investment conglomerate. Those transactions gave it interests in the Bruce, Keith and Rhum assets and involved a profit-sharing arrangement with BP, BHP and Total. Its production has increased to 30,000 barrels of oil equivalent per day from 2,000 barrels/day at the end of 2017.
Small independent oil and gas companies have a long history in the North Sea and Serica and RockRose are not the only independents participating in the latest M&A flurry, with EnQuest recently acquiring the Magnus oilfeld from BP.
But both RockRose and Serica argue their case is different, as they are following an unconventional route.
RockRose was doing business “the other way round”, said Mr Austin, by securing production first rather than drilling wells, appraising a discovery and then trying to develop it.
Tony Craven Walker, executive chairman of Serica and a North Sea veteran, has been replicating with Serica a model he had already tested with Monument Oil & Gas, once a leading UK independent, which was sold in 1999.
“We started off [with Monument] by buying production from Petrofina, BP and a couple of other people. After we had the production, we then expanded it into a bigger portfolio of exploration, development, appraisal, all sorts of things that we could fund on the back of the production,” he said.
Mr Craven Walker cited the 2016 merger between Norwegian independent Det norske oljeselskap and BP’s Norwegian unit to form Aker-BP as the kind of deal Serica would like to do next to secure more development and appraisal assets. “We need to merge ourselves together with a portfolio,” he said.
Mitch Flegg, Serica’s chief executive, said he did not see companies such as his in competition with the private equity-backed players such as Chrysaor but rather operating in a “different niche” by taking on assets where there are issues to be resolved — with the ownership structures for example.
“We are prepared to take things that have real problems that need solving,” Mr Flegg said.
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