THE chief executive of North Sea-focused Deltic Energy, Graham Swindells, has underlined the firm’s appetite for North Sea acquisitions as he declared the area could recover from the turmoil triggered by the coronavirus.
The plunge in oil and gas prices since March has left the North Sea facing the prospect of a long and deep downturn. A range of firms have announced plans to cut spending and jobs in the area.
However, Mr Swindells said London-listed Deltic is looking at a range of acquisition opportunities including oil assets off Scotland.
“We certainly see an opportunity in the current market,” he said, noting the firm has cash in the bank. This has put it in a strong position at a time when many sector players are struggling.
After focusing on exploration, Deltic would be interested in buying into production assets, which generate cash that it could use to fund its work, or “near term drilling opportunities”.
Assets may become available at knock down prices as firms look to save cash.
But Mr Swindells reckons the longer-term outlook is brighter than prices suggest.
The Ayrshireman noted that people recognise gas is going to be a key part of the mix for decades to come. It can help reduce reliance on more carbon-intensive energy sources such as coal while the required renewable energy generation capacity is developed.
“I don’t think demand for oil on a global basis is going to disappear any time soon.”
Experience gained during the deep downturn triggered by the slump in oil prices from 2014 to 2016 has left Mr Swindells confident the North Sea can recover.
“The North Sea has been written off or the end of the North Sea has been called many times before but the industry has always managed to adapt and innovate.
“I certainly believe that through innovation, technology and collaboration our company and the industry as a whole, certainly as the North Sea is concerned, will continue for many decades to come, subject to getting through these difficult times.”
Mr Swindells thinks Deltic, which changed its name from Cluff Natural Resources recently, has made good progress in recent years against a challenging backdrop.
Founded by a pioneer of North Sea exploration, Algy Cluff, the company expanded in the area during the last downturn although others were turning their backs on it.
The Aim market-listed firm took on licences covering acreage it reckoned had potential which had been overlooked by others.
The company achieved a significant coup last year when the mighty Shell bought into some of its territory and agreed to fund work on two prospects.
“These are licences that were held by previous operators in the past but through looking at them in a different way and applying the latest technology to reprocessing we’ve been able to identify additional opportunities to the point that what did not seem viable 20 years ago now appears very much viable.”
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