Business Outlook 2018
Although there has been a trend towards divestment from majors and investment from smaller independent companies through private equity finance, there were a variety of deal types and sizes last year that offer a real sign of confidence in the UKCS. While the majors have often been the sellers in recent M&A deals (with the exception of the Total takeover of Maersk Oil), they have retained their stake in assets they consider core to their portfolios. They are not seeking to exit the UKCS and still view it as a basin of strategic importance. Meanwhile, on the purchasing side, private equity vehicles and independently backed companies are increasingly investing in the UKCS with a view to creating value by driving efficiencies within producing assets and enhancing their portfolios through the appraisal and progression of future development prospects. This has added to activity levels at a time when the domestic supply chain needs it most. The world-class domestic supply chain is one of several factors that makes the UKCS an attractive destination for potential investors, along with a competitive fiscal regime, a more co-operative business culture, straightforward access to markets, relative geopolitical stability and an exceptional geological understanding that shows up to 20 billion barrels of oil equivalent (boe) are yet to be recovered from the basin.
Oil & Gas UK expects M&A to continue during this year, albeit on a lesser scale than in 2017, as many new owners work hard to maximise value from their newly acquired portfolios.
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