Corporate M&A

HitecVision-backed NEO Acquires Zennor Petroleum

By Isha Makkar
March 08, 2021
2 minutes read
Shearwater Platform, UK North Sea

NEO E&P Ltd., a portfolio company of private-equity firm HitecVision AS, has entered into an agreement with Kerogen Capital (Asia) Ltd., to acquire 100% of Zennor Petroleum Ltd., for a total consideration of up to US$625 million, including certain deferred and contingent payments.

Kerogen Capital has invested a total of approximately US$300 million in Guildford-based Zennor since acquiring it in 2015. In October 2019, Kerogen Capital had announced its plans to divest its stake in Zennor, and had engaged Citigroup as its financial advisor to help market the stake.

Zennor currently holds non-operated interests in four producing fields (Britannia, Bacchus, Mungo & Monan, and Cormorant East) in the UK North Sea, and 100% operated interest in its flagship Finlaggan Development project. In addition, the company also holds interests in several near-field discoveries, including three development fields (West Teal, Murlach, and Courageous), nine appraisal fields (Gilderoy, MacCulloch, Shirley, Fay, Christian, Starweb, Bowmore, and Leverett/Greenwell), and three exploration assets (Ruvaal, Fisher, and Rutford).

The company has total proved + probable (2P) reserves of approximately 40 million barrels of oil equivalent (MMboe), and unrisked resources of approximately 90.0 MMboe as of January 1st, 2021. Average daily production is currently around 5,000 barrels of oil equivalent per day (boe/d), and is expected to increase to approximately 20,000 boe/d during Q4-2021.

The deal with Kerogen Capital follows NEO’s announcement last month about its agreement with Exxon Mobil Corp. to acquire most of its non-operated upstream assets in the UK central and northern North Sea for over US$1 billion.

“This transaction provides a further immediate uplift to NEO’s production and resource base with several high-quality follow-on development opportunities. This follows closely on from our agreement with ExxonMobil and is a further demonstration of the scale of our ambition in the UKCS, with a clearly defined target of achieving 120,000 boe/d in 2023,” commented Russ Alton, CEO of NEO.

HitecVision is an oil & gas focused private equity firm with a portfolio of investments in offshore operators and oil field services companies focused primarily on the North Sea. The firm currently has approximately US$6.6 billion of funds under management.

London-based NEO was established by Norwegian private equity firm HitecVision in March 2019 with the aim of becoming a full-cycle E&P company, and has built a material position in the Northern Europe offshore area through acquisitions.

Kerogen Capital is focused on investments in the upstream oil & gas sector internationally and provides expansion and development capital to established junior oil & gas companies, with currently over US$2 billion of capital commitments across three funds and their related parallel and co-investment funds.

The transaction is subject to customary closing conditions including customary regulatory approvals, and has an effective date of January 1st, 2021.

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