Mercuria to become biggest shareholder in key UK gas producer


Swiss oil dealer Mercuria will become the most important shareholder in one of many UK’s high 10 gas producers after two North Sea firms agreed a £644mn takeover deal.

London-listed Serica Energy, which is answerable for 5 per cent of the gas produced in the UK, on Tuesday introduced a takeover of Tailwind Energy Investments, a rival North Sea oil and gas group owned by the Swiss commodity group.

The takeover has been agreed regardless of fears {that a} rise in the UK windfall tax on fossil gas producers in November would pressure oil and gas producers to focus their investments overseas.

Under the phrases of the deal, which is valued at £644mn together with debt, Serica will problem up to 111mn new shares to Mercuria and the administrators of Tailwind Energy, who collectively personal the privately held firm.

Serica may even pay £58.7mn in money upon completion of the deal, which is aimed for March if shareholders in the London-listed group approve the association at a gathering in January. Serica may even tackle Tailwind’s debt, which was £277mn on the finish of November.

The association will hand Mercuria a 25.2 per cent stake in Serica, dwarfing the shareholdings of different present traders, who’re at the moment led by retail traders David and Debbie Hardy. Two non-executive administrators nominated by Mercuria will be part of the board of Serica as soon as the deal closes.

The takeover will improve Serica’s publicity to oil costs. Currently greater than 85 per cent of the corporate’s manufacturing is gas however that is anticipated to fall to 53 per cent. Tailwind’s property embrace vital pursuits in the Triton space of oilfields in the UK North Sea.

Tailwind additionally has greater than $2.5bn of tax losses, which may very well be utilized by the enlarged group in future to scale back its funds to the UK authorities.

Serica’s chief govt Mitch Flegg stated the takeover achieved the corporate’s purpose of “materially increasing” its scale and variety in the UK North Sea however it might additionally doubtlessly lead to enlargement abroad.

“Through the introduction of Mercuria as a new strategic investor, we will be differentially positioned to take advantage of the opportunities we expect to arise through industry consolidation . . . and potentially overseas,” stated Flegg.

However, analysts urged some Serica shareholders may favor greater money returns than a stake in an even bigger firm.

“Serica is a highly cash generative business and the question will be whether shareholders want greater near term returns, or support a larger, longer-term business with aspirations to do further deals potentially beyond the UK North Sea,” stated Investec analyst Nathan Piper.

Shares in Serica Energy had been down 7 per cent at mid-morning on Tuesday.

Tailwind was arrange in 2016 amongst a wave of latest oil and gas firms that aimed to purchase unloved property in UK and Norwegian waters from retreating power majors and utilities, which had been shrinking their portfolios following the oil value crash of 2014. Many of these newer oil and gas firms — which had been usually backed by non-public equity firms — are actually on the lookout for an exit.

Earlier this 12 months, Siccar Point Energy, which was backed by non-public equity group Blackstone, was bought to Ithaca Energy. Italian power main Eni has held early talks to purchase Neptune Energy, based in 2015 by former Centrica boss Sam Laidlaw, for as a lot as $6bn.

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