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The UK’s Neptune Energy has hired a veteran US executive to lead its expansion as it prepares to complete its $4bn acquisition of oil and gas assets from Engie of France. Jim House will become chief executive of Neptune in January after 26 years at Apache, the US oil and gas group, with a goal to strike further deals in the North Sea and elsewhere.
Neptune has powerful financial backing from its owners Carlyle Group and CVC Capital Partners, the US private equity groups, and China Investment Corporation, the Chinese sovereign wealth fund. Sam Laidlaw, the former Centrica chief executive who is executive chairman of Neptune, said he would work with Mr House to add further assets once the Neptune deal was completed in the first quarter of next year. “As soon as the transaction closes we will start to look at opportunities,” he said. “We’re focused on growing this business and using it as a platform for further investment in the North Sea, north Africa and Southeast Asia.”
The deal with Engie was part of a wave of private equity-backed investments in the North Sea over the past year as longstanding owners have withdrawn. Oil and gas majors such as Royal Dutch Shell and BP have been selling assets to help reduce debts and finance investment in lower-cost, higher-growth parts of the world. Utilities have also been rethinking their role in North Sea production.
Some, including Engie, RWE and Eon have exited altogether while Centrica has restructured its exploration and production assets into a joint venture with Bayerngas Norge of Norway. Neptune is one of several newly formed companies that has taken advantage of the shake-up to build a sizeable presence in the North Sea and elsewhere. Others include Chrysaor, backed by EIG Partners, a US private equity group, which bought half of Shell’s UK production base last January for up to $3.8bn. “Private equity has moved into the North Sea in a big way,” said Fergus Marcroft, a banker at Hannam & Partners in London. “They are building platforms to commercialise resources which are just too small for the majors to bother with.” Mr Laidlaw said Neptune was aiming to float on the stock market within three to five years and possibly sooner.
Chrysaor is expected to do the same. Mr Marcroft said both would have to make more acquisitions before their initial public offerings. “Their assets are quite mature so they will need more resources to flatten their decline curves,” he said. “There are still lots of barrels available in the North Sea but all the easy stuff has been done and the majors can find better opportunities elsewhere.” Mr House was most recently in charge of several international regions, including Egypt and the Gulf of Mexico, for Apache based in Houston and before that spent nine years in Aberdeen running the company’s British operations, which include the Forties oilfield, the largest in the UK North Sea.
The Engie acquisition will give Neptune more than 150,000 barrels a day of production in the North Sea, north Africa and Southeast Asia — well ahead of established London-listed independent producers such as Premier and EnQuest.