UK North Sea asset sales stall as money goes elsewhere

Thu Oct 9, 2014 8:01pm EDT
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* Opportunities in other parts of globe more attractive

* Bigger packages have limited number of potential buyers

* U.S. firms see better return on capital from shale

By Claire Milhench

LONDON, Oct 10 (Reuters) - A lack of buyers willing and able to take on ageing oil rigs in Britain's North Sea has stalled deal flow this year, creating a headache for North American firms who are under pressure from shareholders to sell.

Marathon, Conoco and Talisman have all put North Sea assets on the block, but the bigger packages are slow to change hands due to wrangling over decommissioning costs, financing problems for smaller buyers, and the fact that some rigs have very little time left on the clock.

In the first three quarters of 2014 there were only 19 deals in the offshore UK market, compared with 63 for the whole of 2013, according to data from Deloitte.

Just four deals were announced in the third quarter, although large packages continued to come to market including Conoco's 24 percent stake in the Clair oilfield.

"Everyone is cutting costs, cutting capital expenditure, trying to sell down assets at the same time and there is a paucity of buyers," said Stephen Murray, a partner at law firm Herbert Smith Freehills. "The balance between sellers and buyers is out of kilter."   Continued...