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Independent Oil & Gas CEO to focus on North Sea plan

THE man who built North Sea-focused CH4 Energy into a £150 million business has said he could grow his latest venture to a similar size quickly and underlined his appetite for further acquisitions.

Confident: Mark Routh,  CEO of Independent Oil & Gas.
Confident: Mark Routh, CEO of Independent Oil & Gas.

Mark Routh, chief executive of Independent Oil & Gas, said the company is seeing lots of opportunities to expand its North Sea portfolio.

"There's a lot of mid cap sized companies that have departed the space in the North Sea, they've either been taken out or merged with other companies and there's a big hole in the market for those kinds of companies, which are £50 million to £200m market cap and that's where we're headed," said Mr Routh. "That's what we'd hoped to do in short order."

He indicated he was not concerned about the potential implications of the referendum on Scottish independence in September.

"I cannot see that it's going to hugely adversely affect business in the North Sea because I think an independent Scotland is going to need a strong oil and gas industry as well," said Mr Routh.

The petroleum engineering expert founded CH4 with £1m in 2002. He sold it to Venture Production for £154m four years later.

He is pleased with the progress achieved by Independent Oil & Gas, which he founded in 2011.

Independent is following the kind of North Sea scavenger strategy followed by Venture, which was bought by Centrica for £1.3bn in 2009, and CH4. This involves buying assets that might be too small to hold the interest of majors and trying to acquire undeveloped discoveries in licensing rounds.

Aim-listed Independent Oil & Gas will focus investment in hub areas close to existing infrastructure in the expectation it will be able to develop groups of small fields that might not be economic as stand alone developments.

The company has acquired a stake in the Skipper field off Shetland and the Blythe licence off eastern England. It is trying to finalise the acquisition of the Cronx licence near Blythe from Swift Exploration for an initial £468,000.

Chief financial officer Peter Young said the company has been seeing plenty of opportunities to expand.

"We're seeing great opportunities to pick up new discoveries relatively cheaply in the licensing round as well as opportunites to potentially acquire production."

He said the company might buy other firms or individual assets and has secured a $50m credit facility it could draw on to fund acquisitions.

The company is keen to buy a producing asset, which would generate cash that it could use to fund activity elsewhere and support borrowing.

Other firms are on the hunt for North Sea assets, including the Aberdeen-based Parkmead Group run by Tom Cross.

However, Mr Young said Independent was confident it would get more deals done.

He noted the tax reliefs the UK Government has provided on the costs of decommissioning fields could stimulate activity.

"It has encouraged some of the large companies to put assets up for sale but not too many buyers have come forward yet."

Mr Young said the tax breaks the UK Government has provided on small fields and heavy oil developments will help to underpin the commerciality of the planned Skipper and Blythe developments.

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