The recent oil and gas news will bring cheer to oil and gas contractors in the UK. The North Sea sector has a new entrant that is buying up low-cost oil assets after the global oil market’s collapse. This new explorer has joined the other small-cap explorers to benefit from the fall in oil prices.
Mayfield Energy has been purchasing oil assets from debt-ridden groups, who are under pressure to perk up their balance sheets. The firm is backed by North Sea industry veterans, who have already started negotiations to purchase oil fields and stakes in existing oil projects. It is anticipated that Mayfield Energy will allocate up to $400 million (£283 million) for its new acquisitions.
The Mayfield board is made up of former BP Chief Financial Officer Colin Goodall, former Shell veteran Evert Henkes, Wood MacKenzie Director David Dennison, and former head of Transfield Roy McKelvie.
Peel Hunt Oil Analyst Werner Riding believes that the North Sea hasn’t gone bust as yet. The downturn in the oil and gas industry is spawning new and successful companies, and smaller oil and gas contractors could benefit from the low prices of assets.
Riding added that small-cap players such as Serica and Faroe Petroleum were also likely to acquire oil assets within the next six months. He said that he would be surprised if the two companies didn’t go ahead and purchase production assets before the end of 2016.
Riding believes that Faroe would be looking to offset its production loss in the Njord area, which is slated to go offline this summer and will impact its revenues if the company doesn’t find a production asset to replace it.
Mayfield’s McKelvie said that the low oil prices were a reality and oil asset holders were beginning to accept this reality, and this in turn was helping in asset sale talks. He also added that investors were willing to invest in new deals.
