North Sea-focused Chrysaor eyes more acquisitions after ConocoPhillips deal

London — North Sea-focused Chrysaor is on the lookout for further growth opportunities following last year's acquisition of ConocoPhillips' UK business and remains financially robust, even as it reins in drilling activity this year, according to an accounts statement filed by its Cayman Islands holding company.

In the 2019 financial statement, Chrysaor, one of the UK's largest independents, with assets in the North Sea and West of Shetland area, said its production had risen to 191,000 b/d of oil equivalent in the fourth quarter due to the ConocoPhillips purchase, completed in September, up from 105,000 boe/d in the full-year 2018.

Chrysaor, which is backed by Washington DC-based private equity company EIG Global Energy Partners, paid $2.5 billion for the assets, which came with a sizeable decommissioning obligation in the southern North Sea. The ConocoPhillips deal came on the heels of a $3 billion acquisition of Shell assets in late 2017.

The company put its operating expenditure at $11.50/boe of production last year, and forecast operating expenditure this year would remain under $15/boe.

It added it was cutting its capital expenditure this year by 30% compared with an earlier unspecified plan, following capital spending of $580 million last year.

It has postponed several drilling projects, both in-fill and exploration related, due to the coronavirus pandemic and the related oil price crash, including appraisal of the Grevling oil project in Norwegian waters with independent OKEA, which may be tied in to Chrysaor's Armada hub in UK waters. The two appraisal wells will instead be drilled next year, the companies have said.

Drilling now expected to take place next year includes an appraisal well at the Talbot discovery in the 'J-Area' (Judy, Joanne, Jade & Jasmine), which feeds the Ekofisk crude stream, as well as in-fill drilling at Jade, the company said.

Norway ambitions

However, it also underlined its interest in expanding into Norway, where the authorities last year granted the company approval to take on future oil and gas operating roles.

Chrysaor noted its $3 billion reserves-based lending facility, more than a third of which is undrawn, and said: "The group is in a robust financial position with strong cash balances and access to undrawn liquidity...even in the current depressed commodity price environment, the group expects to continue to generate positive free cash flow after interest and tax in 2020, given the strength of its hedge book combined with its cost reduction program."

"Chrysaor will continue to look at growth and value-driven opportunities, primarily in the UK and Norway to create a market-leading North European exploration & production company."

The company had operating cash flow after capital expenditure of $988 million last year, and ended the year with net debt of $1.9 billion.

For 2020, 22.8 million barrels of its oil production is hedged at an average price of $63/boe, while for gas, it has 853 million therms hedged at an average price of 46.6 pence/therm.

Chrysaor is 90% owned by Harbour Energy, in turn an investment vehicle of EIG Global Energy Partners.