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North Sea waters start to calm

Total's Maersk oil deal is unlikely to be surpassed in the region any time soon

After a flurry of mergers and acquisitions so far in 2017, activity based on North Sea assets is likely to become more subdued, with most of the choicest prospects on the market now having changed hands.

The first half of the year saw more than $9bn of value traded in North Sea-related M&A, more than for the whole of 2016 put together, according to consultancy Wood Mackenzie. The biggest were Chrysaor's purchase of a package of Shell's North Sea assets worth almost $4bn, private equity-backed Neptune Oil & Gas's acquisition of Engie's exploration and production business for around $4bn and the purchase of the oil and gas business of Denmark's Dong Energy for $1.3bn. These deals were notable for their creative structures, with flexible terms that took into account elements such as future oil-price changes and sharing the cost of future field decommissioning between buyer and seller.

Total's $7.45bn purchase of Maersk Oil from AP Moeller-Maersk in August has piqued interest further. Total highlighted the economies of scale it would achieve by combining Maersk's North Sea assets and administration with its own.

But this could prove to be a high-water mark in terms of North Sea M&A deals for the foreseeable future, given the absence of obvious targets.

Lundin Petroleum—Swedish based, but Norway focused—is the only sizeable North Sea-focused independent company with a wide spread of assets. Its 22.6% stake in Norway's Johan Svedrup field has similar attractions to Maersk Oil's 8.66% stake in the same project, providing any buyer access to some of the world's highest-quality oil assets. But Norwegian state-controlled Statoil bought an 11.9% stake in Lundin in early 2016, to take advantage of the overlap between the two companies' activities.

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