Siccar Point in first North Sea oil deal as private equity warms to sector

By Ron Bousso

LONDON (Reuters) - Private equity-backed oil and gas venture Siccar Point Energy announced its first North Sea investment on Tuesday and said it planned to do more deals over the next year as cash-rich firms step up activity after a two-year rout in the sector.

Siccar Point, headed by Jonathan Roger, a former Centrica executive, and backed by private equity firm Blue Water Energy and Blackstone (BX.N), acquired a 8.9 percent stake in the UK North Sea Mariner field from JX Nippon .

Several private equity, or PE, funds such as Carlyle Group (CG.O) and CVC Partners have joined forces with veteran energy executives in recent years to form companies seeking to snap up assets around the world amid the sharp drop in oil prices.

Siccar Point also announced on Tuesday the appointment of former BG Group (RDSa.L) Chief Executive Chris Finlayson as chairman.

These cash-rich companies are likely to play a growing role in the ageing North Sea basin where oil and gas companies have struggled in recent years to sell assets.

Recent signs of a rebound in oil prices, coupled with abundant assets on sale around the world, have revived appetite for mergers and acquisitions around the world, with companies including Exxon Mobil (XOM.N) and Norway's Statoil (STL.OL) making major deals in recent weeks.

"Mariner provides our business with a great platform to build on with a 30-year producing asset particularly with the anticipated recovery in oil prices," Roger told Reuters.

MORE DEALS

Although Siccar Point, created in August 2014, has reviewed nearly 100 different assets available in the North Sea, it is focusing on fields with a long remaining production life which it can preferably operate and control costs, Roger said.

"We're highly focused over the next 6 to 12 months to get some other substantial investments made."

Mustafa Siddiqui, managing director at Blackstone, said Siccar Point has an official line of equity of $500 million (£385 million) but has further access to debt as well as more than $8 billion Blackstone has allocated for energy investment.

"The Mariner acquisition is just the first step in hopefully a long string of acquisitions of high quality assets," Siddiqui told Reuters.

After sellers' and buyers' price ideas for assets diverged significantly in 2014 and 2015, the "bid-ask spread" is narrowing as both sides agree on the outlook for the oil price, Siddiqui said.

"Companies are starting to have a more realistic view of assets and that tends to facilitate deals."

The Mariner heavy oil field in the East Shetland region of the North Sea is operated by Statoil and is expected to begin production in 2018. Around 80 percent of its development has been completed, Roger told Reuters.

JX Nippon Exploration and Production (U.K.) Limited will retain a 20 percent stake in the field following the deal.

(Editing by David Clarke and Adrian Croft)