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UK’s Largest Independent Oil Producer To Begin North Sea Drilling In 2018

Chrysaor will begin drilling in the North Sea in 2018 following its $3.8 billion purchase from Royal Dutch Shell, the company’s chairman Linda Cook said Wednesday, according to Reuters.

The deal made Chrysaor the largest independent driller in the United Kingdom. The company is backed by Harbour Energy, which is owned by EIG Global Energy Partners. Cook said Chrysaor is also interested in new acquisitions in the North Sea.

“We’re already looking at further acquisitions we can make in the North Sea to broaden and deepen the assets that we have acquired ... We are eager to broaden our geographic scope in Chrysaor to include Norway and Denmark,” she said.

CEO Phil Kirk was keen on an initial public offering within the next year, after funding several acquisitions through internal cash generation coming from existing production activities.

“If we are able to meet our growth aspirations and shape our portfolio in a way that will be interesting then I think absolutely we could have a very viable IPO candidate,” she said.

A recent report from Wood Mackenzie says that the North Sea has become the second-hottest spot for oil investments, after U.S. shale. That’s largely due to private equity’s renewed appetite for oil and gas investments: according to the consultancy, there’s a total of $15 billion in capital waiting to be spent on North Sea acquisitions.

Related: The Oil And Gas Industry Is Hiring Again

In the first half of 2017, deals worth almost $6 billion were sealed in the North Sea oil industry, the Oil & Gas Authority said in its Economic Report 2017, noting that these and future acquisitions serve as a sign of the industry’s gradual improvement and are a much-needed source of new investment that will ensure future production in the region.

Production costs in the North Sea have been high, but the oil price crash has motivated companies to find cheaper ways to extract fuel from the aging fuel source. BP, for instance, has cut its production costs from $30 a barrel to about $15, and plans to further reduce this to less than $12 by 2020. Shell and other producers have managed to cut costs by as much as 60 percent.

By Zainab Calcuttawala for Oilprice.com

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