UK-based explorer Trapoil has agreed a deal with private equity firm Prostar Capital, which could see Trapoil help Prostar sweep up undervalued North Sea assets.
According to Trapoil, Prostar’s management believes that there is considerable value in the North Sea, a sentiment echoed in the recent Wood Review, and by North Sea exploration analysts. Read more: All eyes on the North Sea
Prostar, set up in 2012, and led by Australian chairman Greg Martin, has already raised US$100 million, targeted at acquiring undervalued assets and companies in the region, says Trapoil. The firm has offices in Hong Kong, Australia, and America.
Trapoil will help Prostar evaluate potential companies and “orphaned asset investment opportunities” with its management and technical expertise, potentially earning up to 2.5% carried interest in any acquisition target, as well as a 2.5% payment on future disposal, and an option to acquire up to 5% in any acquired assets.
Analyst and commentator Malcolm Graham-Wood, of Malcy’s Blog, said: “With a lot of merger and acquisition work going on in the sector, could this be the mopping-up of the smaller-end of the North Sea predicted by a number of people for some time?”
Trapoil said it had also agreed a revised deal with Suncor Energy UK on the Romeo discovery (License P.1666, Block 30/11c), which will see Trapoil take over the majority stake.
Trapoil currently holds a 22.5% interest in Romeo and 28% in the Niobe prospect (Licence P.1889, Blocks 12/26b & 27). Under an agreement with operator Suncor, Suncor’s 5.5% share of Trapoil’s existing carried interest in Niobe will be extinguished in return for Suncor assigning Trapoil its entire 50.625% stake in Romeo. On completion, the partners in Romeo will be First Oil & Gas (15%), Total E&P UK (11.875%), and Trap Oil (73.125%).
Total controls, with 100% equity, the adjacent block to the west of and containing about 20% of Romeo, as well as a lookalike structure named Alfa (or Scarinish). In Q4 2013, Trapoil farmed out its Valleys asset, located near the Forties field, to Total, and in return negotiated an option to acquire up to a 35% in Alfa. This option has been extended to late July 2014. Drilling on Alfa could be key to unlocking Romeo, says Trapoil. Alfa is expected to be drilled in 2015.
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