Stavanger: Private equity is eyeing a return to exploration and production projects offshore Norway, which could lead to consolidation as well as delisting of smaller oil companies, a top North Sea oil entrepreneur said.
Harald Vaboe, founder of private equity-backed oil explorer Revus which was bought by Wintershall for $740 million in 2008, said the financial crisis had reduced appetite for high-risk Norwegian E&P firms.
Now private equity is again on the prowl, said Vaboe, who is leaving Wintershall to join private equity group Hitec Vision.
Publicly traded E&P companies, meanwhile, are under excessive pressure to turn a profit quickly and limit risk, he told Reuters in an interview last week.
"E&P is capital intensive and high risk, which does not fit with the mindset of investors [in the public capital markets] during the ongoing financial crisis," Vaboe said.
"It may be beneficial for some companies to be taken private and developed that way. Consolidation is also likely as public equity returns to E&P in a bigger way," Vaboe said, adding that he did not have any specific takeover targets in mind.
Hitec Vision Private Equity was behind such outfits as Revus, Noreco and Spring Energy.
About a decade ago, a number of private equity-funded oil companies started operations offshore Norway as part of the authorities' efforts to speed up development of smaller fields that would not be a priority for bigger producers and majors.
Typically these companies acquire licences or other small E&P firms and focus on finding oil and gas, then sell the bulk of their discoveries to gain the funds to explore new areas. Some have production assets to fund extensive drilling programmes.
Vaboe said that private equity-backed companies going forward will probably focus on gaining access to acreage in the North Sea and Norwegian Sea instead of the Barents Sea.
