GTW potential19 Jun 2019 01:44
https://www.financierworldwide.com/roundtable-consolidation-in-the-uk-energy-market July 2019 Issue
Some key points
"New development opportunities in the North Sea continue to make the basin an interesting long-term play for some, including some of the remaining majors. We are seeing continued deployment at scale of renewables, and in particular offshore wind, as the low-carbon technology of choice continues the trend of energy transition away from carbon-intensive sources."
"The mood in the North Sea is more positive, with higher oil prices of late. Increased confidence has brought more investment in new projects and more M&A as the value gap between buyers and sellers has narrowed. The oil & gas regulator, the Oil and Gas Authority (OGA), is focused on maintaining or increasing investment and production and maximising economic recovery (MER)."
"Oil & gas assets generating stable production at relatively low cost are the safest bet, particularly for those concerned about further oil price volatility. Targets that offer cost or tax synergies can be particularly attractive."
"Sellers have also had to take a pragmatic approach to decommissioning liability and decommissioning security arrangements – a number of sellers have agreed to share some future decommissioning costs associated with the assets being sold or to continue to ‘front’ decommissioning security."
"Sellers have had to accept that they will bear a share of the cost of decommissioning the assets they are selling and retain greater exposure to the risk that future decommissioning liabilities come back to haunt them after they have sold out. This is driving some creative structuring of consideration and payment flows between buyers and sellers, new approaches to decommissioning security, and some careful structuring by financial sponsors and other investors to try to reduce the risk that other entities in their structure become ‘contaminated’ with exposure to decommissioning liability."
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