I thought I was reading an old copy of the oil and gas news. But it turns out that reports of a major private equity deal this week are actually completely new--and show an intriguing pattern emerging in an unexpected place.
I wrote late last week about energy investment specialists Riverstone Holdings making a big bet on the North Sea. With the Houston firm teaming up with Barclays Natural Resource Investments and Singapore sovereign wealth fund Temasek to inject $525 million into a new company focused on assets in the shallow-water of U.K. and Norway.
This week--just days later--we got news of another deal in this space. One that looks almost identical.
Private equity stalwart Blackstone Group announced it is also going to the North Sea.
Teaming up with London investment house Blue Water Energy and Singapore sovereign GIC to commit $500 million to a start-up here.
The firms' new North Sea vehicle is called Siccar Point Energy. Which will focus initially on oil and gas assets in the U.K. Continental Shelf--led by a management team that's been successful in this region before, most recently with the upstream arm of British gas company Centrica Energy.
The confluence of two big private equity deals here within days is striking. Especially given that few observers in the petroleum world believe the North Sea holds much in the way of production and reserves upside.
But this week's news release provides some clarity on where Blackstone and friends see the potential here. With Siccar Point noting that it will pursue "innovative technologies and strategies to unlock the maximum commercial hydrocarbon potential" for assets here.
Indeed a number of advanced drilling projects are today proceeding across the North Sea region. With techniques like directional wells and even hydraulic fracturing being tested to increase production from smaller and more mature fields.
Judging from the results of similar programs in places like the U.S. Gulf of Mexico Shelf, this could unlock a lot of new barrels. In which case, picking up acreage at today's very reasonable prices will be a profitable move.
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Here's to lightning striking twice,
Dave Forest
