Wednesday 10 July 2019 9:34 am

Private equity takes another bite out of the North Sea as Total sells oilfields for $635m

Total is set to sell a group of North Sea fields it bought from AP Moller-Maersk in 2018, becoming the latest oil major to sell off assets in the dwindling basin.

Private equity firm Hitec Vision and Petrogas, the Omani oil group, will chip in to buy the $635m (£509m) fields.

Read more: Chrysaor takes another big chunk in the North Sea with $2.7bn deal for Conoco Phillips oilfields

The fields are set to produce 25,000 barrels of oil equivalent this year. They will be owned by Petrogas NEO UK, a subsidiary of the two.

They hope to lift the company’s production to over 100,000 barrels within the next two or three years. This may include further acquisitions.

Total bought the fields in 2018, making it the second largest operator in the North Sea. It employs 2,000 people it he UK.

“This transaction is consistent with our portfolio management strategy, aiming at lowering our break-even point by optimizing capital allocation and divesting high technical costs assets,” said Arnaud Breuillac, the head of president exploration and production at Total

The deal continues the trend of private equity stepping in to replace world’s biggest oil producers.

Earlier this year Chrysaor bought fields from Conoco Phillips for $2.7bn.

Read more: Private equity firms set to snap up Total’s North Sea oil and gas fields this week in £1bn deal

Several oil majors are looking for the exits after picking much of the low-hanging fruit in the North Sea. The exits were sped up when the bottom dropped out the oil market in 2014.

Meanwhile the US giants are trying to re-consolidate and invest in cheap production in the booming US shale fields. The late-life North Sea is seen as a low-return investment in the face of onshore US production.

Main image credit: Getty