Sam Laidlaw, former Centrica Plc chief, and private equity’s Carlyle Group and CVC Capital Partners plan $5 billion of oil and gas investments to benefit from asset sales by industry giants in the wake of slumping crude prices.
Neptune Oil & Gas Ltd., set up by the partners, will seek deals in the North Sea, North Africa and Southeast Asia.
“Neptune intends to create a mid-size exploration and production company in the 75,000 to 100,000 barrels-a-day range,” Laidlaw, the quarter-century industry veteran who in running the U.K.’s biggest utility became one of the nation’s best-known energy executives, said in an interview on Tuesday.
The new company joins a rush to raise money for energy acquisitions after oil prices plunged to about $60 a barrel from more than $100 a year ago. The top-four private-equity groups, Carlyle, Apollo Global Management LP, Blackstone Group LP and KKR & Co., have raised at least $30 billion for deals in the past 18 months, according to data compiled by Bloomberg.
With the wave of cash helping valuations defy gravity, some investors have yet to find anything to purchase with their recently accumulated war chests.
Neptune would like to “buy a significant portfolio” in just one or two deals, though it may have to wait, Laidlaw said.
“Valuations have yet to reflect the new reality of the oil price,” the former Centrica chief executive officer said. It’ll take “a while” before the facts sink in, he said.
Mick Davis, the former Xstrata Plc CEO, has yet to spend the more than $5 billion he raised in the past two years for his X2 venture. Jonathan Roger, previously at Centrica, is also waiting to deploy the $500 million generated from Blackstone and others in 2014 for his Siccar Point in anticipation of North Sea deals.
That said, the need for companies like BP Plc, Royal Dutch Shell Plc and Total SA to protect shareholders’ dividends in the face of lower oil prices points to the logic of resource sales.
The North Sea, where Laidlaw helped build Centrica’s oil and gas business, already has companies offering assets.
LetterOne, controlled by billionaire Mikhail Fridman, may sell North Sea fields, bought from RWE AG, under pressure from the U.K. government due to concerns about the risk of sanctions against Russian interests. The U.K. in April said it was giving LetterOne as long as six months to arrange a sale of the assets.
“An extended period of lower oil prices is likely to drive” more North Sea deals, Michael Alsford, an oil analyst at Citigroup Inc., wrote in a report on Tuesday.