Top Oil Execs, Cash-Rich Funds Team Up To Buy UK North Sea Assets

High-profile oil and gas executives are teaming up with private equity funds seeking to invest billions in UK North Sea assets.

LONDON, May 15 (Reuters) – High-profile oil and gas executives are teaming up with private equity funds seeking to invest billions in British North Sea assets and maximize profits by cutting costs, offering the ageing basin a badly needed lifeline.

With an estimated $10 billion in their war chests, large funds including Riverstone Energy, Carlyle Group and Blackstone are in talks to buy producing assets or invest in struggling exploration and production (E&P) companies, several bankers and industry sources said.

The funds are hiring high-profile executive teams who will use their experience to drive costs lower by introducing efficiencies and slash contractor costs at new assets.

Fresh investment in the North Sea has stalled in recent years due to a relatively unfavourable tax regime. Output from many fields has steadily declined since the basin's peak production in the 1990s.

Despite that, some assets remain highly attractive. These include the Laggan Tormore field, where France's Total is selling, and gas fields being put on the block by Russian billionaire Mikhail Fridman's LetterOne fund.

"Private equity and other funds are beginning to make more concrete steps towards completing investments in the North Sea," one source involved in such talks said.

In some cases, funds and executives are opting to create new vehicles to manage oil and gas fields such as Siccar Point, created late last year and headed by Jonathan Roger, a former executive at Conoco and British energy supplier Centrica, and backed by Blackstone and BlueWaterEnergy.