Opportune Quarterly Review: EMEA Q3 2017

the 5 THEMES THAT ARE SHAPING THE INDUSTRY

Mergers & Acquisitions and Portfolio Optimization
• Majors largely completed their divestment programs selling non-core and mature assets. The M&A
agenda shifted to selective growth (Total’s acquisition of Maersk Oil and Statoil acquisition of Martin
Linge and Garantiana assets)
• Some US private equity firms rethreaded from investing in the international Exploration & Production
(“E&P”) sector (Lime Rock, Riverstone, First Reserve, KKR) while others (Carlyle, Kerogen Capital,
HitecVision, Blue Water Energy) are the most active buyers
• Consolidation process of mid-size E&P players (Aker BP, Centrica / Bayerngas Norge) aimed at
creating critical mass and reduce SG&A. Small-size explorers are adding producing assets to create
a sustainable full cycle business model (Savannah Petroleum’s acquisition of Seven Energy)
• Emerging players (DCC Energy, Intervias), independent downstream groups (API, Varo Energy) and
international traders are acquiring distribution outlets including fuel retail networks and LPG
businesses

Production Outlook
• Focus on value rather than growth. Shift towards shorter-cycle projects
• Hotspots: North Sea (M&A), conventional offshore projects targeted by EMEA companies (Mexico,
Brazil, Guyana-Suriname)

Capital Spending and Cost Control
• Discipline on capital spending and costs. A leaner industry is emerging from the downturn but there
are now concerns on the sustainability of the supply chain
• Exploration drilling benefited from lower costs: current activity and 2018 prospects are sound
• Governments in oil producing countries are considering changes in hydrocarbon fiscal regimes to
attract investments and revive domestic growth

Development of the Gas Market and LNG Trends
• The permanent closure of the Rough storage terminal increased UK reliance on Qatari LNG imports
• Strong European gas demand sustained by the power sector and its transition from coal to gas
• China’s imports of LNG surged driven by a significant shift from coal to gas for residential heating and
industrial production

Capital Markets and Financing
• Acquisition financing is available in the North Sea and for portfolio companies of private equity firms
• Equity capital markets re-opened to follow-on offers of solid equity stories (Hurricane Energy,
Savannah Petroleum / Seven Energy). The IPO market is still frozen
• Window of opportunities in the Nordic high-yield bond market (Tulip Oil’s US$ 100 million placement)

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