LONDON (Reuters) - Chrysaor, which has just bought much of Shell’s (RDSa.L) UK North Sea assets for up to $3.8 billion, said it was in the market for more North Sea deals to expand its newly acquired position as one of the basin’s biggest independent producers.
Overnight, Chrysaor became one of the largest oil and gas producers in Britain with output of 115,000 barrels of oil equivalent per day, snapping up more than half of Shell’s British production capacity, including the Buzzard field which helps to set the global Brent oil benchmark.
Chrysaor, backed by private equity fund EIG Partners and Noble Group (NOBG.SI) investment firm Harbour Energy, said it will not stop there.
“Our focus will be in the North Sea on assets that add synergies or help us broaden or deepen our portfolio,” said Linda Cook, who has taken over as chairman of Chrysaor. She has previously been managing director at EIG and chief executive of Shell’s gas and power business.
Cook said the company was considering acquisitions in the British and other parts of the North Sea.
The independent producer’s break into the mature North Sea market mirrors a trend whereby traditional operators such as Shell and BP (BP.L) are slowly withdrawing from old basins to focus on new areas where prospects for new big-ticket oil and gas finds are higher.
Chrysaor, named after one of Medusa’s sons in Greek mythology, said operating costs across the new assets are below $15 a barrel. Brent crude oil prices are currently trading above $55 a barrel.
Around one quarter of its portfolio is now operated assets, meaning Chrysaor is the main manager of the fields.
“We do have a medium-term plan to build operatorships closer to 50 percent,” said Phil Kirk, chief executive of Chrysaor.
As oil prices have fallen over the past two and a half years, many large operators have cut costs to the bone, letting staff go and investing much less in finding new fields.
“We see our philosophy as radically different to that. We see the best way to reducing unit costs is to drive up volumes of hydrocarbons processed,” Kirk said.
He has already earmarked 6 or 8 new wells which Chrysaor will likely approve for investment, but which would have been unlikely to get approval under Shell, he said.
The new owner also plans to withdraw an application for cessation of production at the Armada hub of gas fields and to invest in extending production instead.
Editing by Jane Merriman