Rise of the Independents

Earlier this month news broke that Statoil were preparing to drill up to 40 exploration wells and, while Statoil remain a dominant player in the industry, this ambitious and prosperous jump into the new year has echoed across the board.

With fresh opportunities for investment in the North Sea, an abundance of smaller, independent companies are now looking to take advantage of the brighter outlook.

Faroe Petroleum, an independent oil and gas company focusing primarily on exploration, appraisal and production opportunities in Norway and the UK, has been pumping life back into the North Sea. Back in 2016, with Aberdeen in the grip of the downturn, Faroe’s Chief Executive Officer Graham Stewart had a distinctly optimistic forecast for his company, stating “I would not give up on the North Sea” as there were “…green shoots coming out of the downturn”. Thus far, Graham’s prognosis appears to be correct. Recently, Faroe have been mobilising a number of projects including submission of their £900 million Fenja Field development and operation plan. The Fenja field, of which Faroe holds a 25% interest, is expected to be up and running by 2021 with a lifespan of up to 16 years.

Faroe aren’t the only independent making waves. Chrysaor Energy proved to be an overnight success story when it acquired $3.8 Billion of North Sea assets from industry major Shell last year.  Their drilling operations are set to commence soon. Similarly, Dana Petroleum and Premier Oil have big aspirations for 2018. The upsurge of investments made by these evolving companies are now providing a renaissance for the industry, prolonging its lifespan and operations.

This new-found optimism for the industry has proved to be somewhat contagious to the larger majors.  Shell’s decision to re-develop the penguins field will see the creation of a new FPSO vessel – the first new manned installation for Shell in the North Sea in almost 30 years.  Additionally, this investment is estimated to generate around 300 to 400 jobs within the local area. This promises an exciting start to the year with such ventures boosting North Sea production and simultaneously steering the industry into a new phase that looks encouragingly towards the future.

Despite this move from Shell we find most of the bigger operators have scaled down their operations over the last few years. This has paved the way for emerging independent companies to put their cards on the table and make positive and courageous investments, ultimately breathing life back into the industry. MML continue to grow and adapt with these companies, contributing to the change that is sweeping the North Sea.