Neo Energy to buy UK's Zennor Petroleum straight after ExxonMobil deal

London — Norwegian private equity-owned Neo Energy is to buy UK independent Zennor Petroleum, its second North Sea purchase in under a month, after it clinched the $1 billion purchase of ExxonMobil's UK upstream business in February, it said March 8.

Neo, owned by Stavanger-based HitecVision, said in a statement its oil and gas production should almost triple to around 90,000-100,000 b/d of oil equivalent in 2022-26 on the back of the two purchases, including Zennor Petroleum's Finlaggan development, which is due on stream later this year.

Zennor is owned by London-based private equity investor Kerogen Capital, which said it would receive $625 million for the purchase, including deferred and contingent payments.

Zennor's main asset is the Finlaggan project, which will supplement production from Chrysaor's Britannia hub, in the central North Sea, but it also has a number of further satellite projects planned, as well as a stake in the Britannia hub itself. Britannia feeds oil into the UK's largest crude supply pipeline, Forties, and gas by pipeline to the St Fergus gas plant in eastern Scotland.

The deal gives Neo another 40 million boe in reserves plus 90 million boe in "unrisked" resources, it said.

On Feb. 24, Neo announced it is to buy most of ExxonMobil's upstream portfolio in the UK North Sea, marking the US major's departure from the UK upstream after more than half a century.

Neo also bought a clutch of North Sea assets from Total in a deal completed last August.

Neo and HitecVision are thus contributing to a recent surge of Mergers & Acquisitions in the UK upstream. The largest deal currently underway is Chrysaor's merger with Premier Oil, to create new entity Harbour Energy, which is due for completion by the end of this month.

"Based on current estimates NEO's production will grow from circa 80,000 boe/d in 2021 to a stable production base in the period 2022–26 of between 90,000 and 100,000 boe/d," the company said. "A growing and then stable production profile in this period gives NEO a unique position in the UK offshore oil and gas industry."

Neo's CEO, Russ Alton, added: "This follows closely on from our agreement with ExxonMobil and is a further demonstration of the scale of our ambition in the UK continental shelf, with a clearly defined target of achieving 120,000 boe/d in 2023."

"Our combined teams will operate a large asset portfolio providing us with greater control and flexibility to maximize value and to invest in further expanding our asset base in the UK continental shelf."

HitecVision previously oversaw the purchase of ExxonMobil's Norwegian assets by Var Energi, a joint venture with Italy's Eni.