North Sea M&A: Dealing with the ‘what ifs’ key to a smooth transaction

North Sea M&A: Dealing with the ‘what ifs’ key to a smooth transaction

At the start of the new tax year, we explore the financial landscape of the energy sector.

Over the coming months we expect to see an increase in M&A activity – already in 2021 the deal value of North Sea E&P transactions has exceeded that of 2020. For opportunistic oil and gas-focused independents and private equity entrants, there are likely to be opportunities to undertake attractive deals in the year ahead across a range of assets, from exploration acreage and field developments to mature late-life assets.

As there are, generally speaking, fewer buyers now in the marketplace, cash-rich potential buyers are succeeding in obtaining more favourable transaction terms than has been the case over the past few years, in particular in areas related to consideration, decommissioning and ability to terminate prior to completion where there has been a material adverse change. The current mood is of increased optimism, certainly for buyers.

Majors and some independents continue to look to exit certain geographic areas, non-core assets or even the industry as a whole to further invest in core areas or the energy transition. In December 2020, SSE and Viaro Energy announced their agreement for Viaro to purchase, via its subsidiary RockRose Energy, all of