Deloitte has launched the sale of Endeavour Energy UK. The US parent company of Endeavour Energy UK is going through bankruptcy proceedings and Deloitte has been appointed to monetise the company’s UK unit.
Endeavour Energy UK owns a 25.7% in Alba amongst other North Sea assets. This is larger than Statoil’s 17% or Mitsui’s 13.3% stake which is being marketed.
Although Statoil and Mitsui have been trying to sell their stakes since the end of last year, the unusually lengthy process signals the challenges with the asset.
The sale being run by Deloitte will be a bankruptcy sale which will allow buyers to pick up the asset on the cheap. As a result, sources involved in running the Statoil and Mitsui sale say that the Endeavour Energy UK route presents a much cheaper way to pick up the same asset, as well as it being a larger, more meaningful stake.
Challenges which bidders had come to appreciate with Alba include:
- Limited upside
- Expensive and near-term decommissioning
- Bankruptcy of Endeavour Energy which would have left the buyer with larger exposure to future costs
Being able to pick up Alba through the Endeavour Energy proceedings at a lower price therefore makes the risks and challenges of owning Alba much more palatable, another bidder said.
Challenges raised by a number of parties who looked at Alba are discussed in depth here:
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