South Korea’s national oil company (NOC) is seeking a financial partner for its North Sea business.
Korea National Oil Corp. (KNOC) has engaged Canada’s Scotia Bank for the sale of a 30% stake in Dana Petroleum, which operates assets in the UK, Denmark and the Netherlands. Banking sources cited by Reuters estimate that the stake could be worth as much as US$550 million.
The deal is likely to be the latest example of private equity-backed investors shoring up their presence in the region as several foreign firms divest their North Sea portfolios.
Between 2016 and 2018, more than US$12 billion of private equity funding entered the North Sea, with a further US$13 billion estimated to flow in the future. In the years since the 2014 oil price crash, oil majors and utilities companies have faced technical challenges in combatting declining production from the ageing basin, as well as a global push for decarbonisation that has led many to seek out cheaper and greener assets.
Private equity funds, on the other hand, are confident that opportunities remain in the North Sea.
Earlier this month, Chrysaor Holdings, an E&P company backed by private equity firm EIG Global Partners, solidified its position as a leader in the North Sea oil and gas sector by acquiring ConocoPhillips’ UK assets for US$2.68 billion. Two years earlier, the firm had also taken over assets from Royal Dutch Shell for US$3.8 billion.
Other major private equity players include Caryle Group and CVC Capital Partners-backed Neptune Energy, which acquired Engie E&P International for 4.7 billion euros (US$5.3 billion) and German utility VNG’s North Sea assets for an undisclosed amount last year.
KNOC acquired Dana Petroleum in a US$2.9 billion hostile takeover in 2010, the largest hostile acquisition by a South Korean company at the time. Dana currently produces around 65,000 boepd.
It is thought the sales process will begin sometime in early May. Scotia Bank will circulate information packages to interested parties, allowing them to conduct due diligence checks on Dana.