Bidders pull out of Alba sale by Statoil and Mitsui

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: 

Endeavour endangers Alba sale for Statoil and Mitsui

Related links:

• Endeavour Energy kicks off North Sea assets sale (external – Reuters)
• Chevron shuts in Alba platform as Mitsui and Statoil try to sell the field

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Chevron shuts in Alba platform as Mitsui and Statoil try to sell the field

Chevron the operator of the Alba field in the UK North Sea has announced at the end of last week that it had been forced to shut down production at the field. This follows a power outage at the platform. Emergency back-up power is in place and the crew continues to try and restore power. The mature heavy oil field which was brought onstream in 1994 is exploited from a fixed platform tied to a floating storage unit.

Endeavour had tried to sell its interest in the field in the past without success and is currently going through bankruptcy proceedings and could lose its stake with the other partners picking up pro rata. Statoil and Mitsui are trying to sell their stakes, but the prospect of unintentionally picking up additional interests from an Endeavour bankruptcy has scared off some potential buyers as this comes with an increased exposure to near-term decommissioning costs which are high for a development of this kind.

The partners in Alba are Chevron (23.37% operator), Endeavour (25.68%), Statoil (17%), Mitsui (13%), Spirit Energy née Centrica (12.65%), EnQuest (8%).

Further issues raised by parties considering the Alba stakes from Statoil and Mitsui include the non-operated interest, limited upside and decommissioning and is detailed in an earlier article compiled from interviews with various potential buyers who looked in the data room: Endeavour endangers Alba sale for Statoil and Mitsui.

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