PRIVATE Equity investors have underlined their desire to buy North Sea production assets such as pipelines amid the shake up triggered by the crude price plunge since 2014 noting the potential to increase returns.
The London-based Ancala Partners business said it is eyeing acquisition targets in the North Sea after completing a deal agreed last year to buy stakes in a range of pipeline and processing facilities from US oil giant Apache.
The midstream portfolio includes stakes in the giant Scottish Area Gas Evacuation network, the Beryl pipeline and the St Fergus processing terminal north of Aberdeen.
The facilities handle the output from nine North Sea fields.
The value of the deal was not disclosed but looks likely to have run into hundreds of millions of dollars. Ancala bought the assets on behalf of investors such as pension funds.
Partner Lee Mellor said pipelines and the like generate predictable income and offer attractive growth prospects. New fields could be connected to the networks.
The deal with Apache “stands on its own feet” but has also provided Ancala with a platform on which it can build a wider North Sea presence..
“We see a pipeline of potential deals,” said Mr Mellor, who noted Ancala is keen to invest in pipelines, processing plants and other assets.
Many are owned by oil and gas producers. The sector has faced intense pressure on earnings resulting from the sharp fall in oil prices since 2016.
“Oil and gas companies can release a lot of capital by selling these kinds of assets to companies like us,” noted Mr Mellor.
Wood Group has been appointed to run the assets that Ancala has acquired.
The chief executive of Aberdeen-based Wood, Robin Watson, is in line to receive a 25 per cent increase in his basic pay, to £750,000 from £600,000.
Wood said Mr Watson’s responsibilities increased following the £2.2billion takeover of the Amec Foster Wheeler engineering business last month.
Apache struck the Sage network deal with Ancala within months of BP and Total agreeing North Sea pipeline sales worth £910 million in total.
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