The identify Blue Water Energy (BWE) could also be new, however the faces are acquainted
BWE is a London-based, vitality centered non-public fairness (PE) agency. It has invested in UK continental shelf (UKCS) producer Siccar Point Energy and Norway's Mime Petroleum, each alongside fellow PE investor Blackstone, and the Norwegian continental shelf centered Wellesley Petroleum.
Graeme Sword—a BWE founder accomplice and previously head of oil and fuel at PE agency 3i, which was energetic in North Sea E&P all through the 2000s—not too long ago spoke to Petroleum Economist editor-in-chief Peter Ramsay.
PR: Is it honest to say the non-public fairness (PE) funding has acquired one thing of an no less than, cautious, if not unhealthy press? And that even the time period “PE within the North Sea” belies variations in method?
GS: I agree that the position of PE shouldn’t be at all times understood. Within the North Sea PE has backed a number of completely different methods. I believe that PE may be very a lot wanted—it gives development capital and begins new firms. It seeks to develop money?ows by investing when many public firms and buyers are retreating. In some ways, PE is extra suited to the wants of latest E&P firms—it may be extra ?exible, not centered on quarterly, annual metrics however fairly looking for to develop worth over the lifetime of its funding in an organization. And PE within the North Sea shouldn’t be a brand new phenomenon. This has been a supply of North Sea funding for 20+ years, establishing Venture Production, CH4 Energy, Highland Energy, Caledonia Energy, Faroe Petroleum, Revus, Agora, Noreco and so on., so arguably there are much less PE backed firms within the North Sea immediately than in earlier cycles.
PR:Would you agree that PE funding ought to really be seen in a optimistic mild?
GS: PE is totally a optimistic for the sector. It is a supply of long-term funding for a sector which is wanting capital and unloved by public market buyers. PE stimulates development by beginning new firms, investing development capital and investing in a variety of E&P methods. It is optimistic as a result of it instils a ?nancial self-discipline that’s required for firms to prosper by the cycle and never simply depend on commodity worth in?ation to ship professional?tability. I might settle for, nevertheless, that PE has not positioned itself effectively sufficient as an business accomplice.
PR: What has introduced PE normally, and BWE speci?cally, into North Sea E&P? Will the development gradual and even halt within the present sustained increased oil worth atmosphere?
GS:BWE has not been introduced into the North Sea, we’ve by no means left! The BWE companions have arrange extra North Sea firms than [the rest of the PE industry combined]. The Partners at BWE have 20+ yr historical past of doing precisely this, specifically constructing North Sea E&P firms. The BWE identify could also be new however the individuals, observe document and method have been established over a very long time interval and thru cycles.
I believe some others have been attracted by the longer life, extra steady money?ows versus US E&P however have struggled for market entry. We like to guide the creation of enterprise plans with prime quality, confirmed administration groups after which herald companions because the deal progresses if we resolve we’d like extra capital.
PR: Various the PE actors have stakes in a couple of firm, most frequently cut up between UKCS and NCS actors. What are the benefits of this method in comparison with one automobile throughout geographies?
GS: PE firms handle funds which have a portfolio of property. In that respect we are not any completely different from quoted fund managers which have investments in a number of firms. Having investments in numerous firms in several markets with completely different methods gives portfolio range. At BWE we’re in search of finest at school groups—it’s dif?cult to ?nd a workforce that may be one of the best in many alternative issues. We additionally imagine that completely different methods have completely different dangers and require completely different capital buildings.
PR: What are the actual “worth add” methods for i) Siccar Point, ii) Mime and iii) Wellesley round optimising current property, undeveloped assets,…