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Wednesday, December 11, 2019

Private equity firm looks forward to continued investment In North Sea

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EV Private Equity has reaffirmed its commitment to investing in North Sea oil and gas technology businesses as it looks ahead to a more buoyant 2019.

The company, with offices in Aberdeen, Stavanger and Houston, has a proven track record of investing in high growth oilfield and equipment services companies around the world and has continued to be active despite challenging times for the sector.

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Greg Herrera, Senior Partner, EV Private Equity said: “We are arguably one of the most active energy focused private equity firms, having made 14 investments since January 2015, which in the UK equates to almost 20% of all new investments and acquisitions in the region during that period.

“This is a clear sign of how committed we are to the sector and how we see the North Sea continuing to offer clear opportunities for investment and high growth due to our enterprising supply chain.

“At the end of 2016 we spoke about investing $200 million in new and established businesses and we’re already well on our way to doing that.  Over the last 12 months we have partnered with Enpro Subsea Limited and Aquaterra Energy Limited, as well as continuing to support those businesses we’ve already backed.

“Our recent investments are performing well and we hope to make several more investments in the North Sea in the next 12 months.”

“From a market perspective we are four years on from the onset of the oil price crash.  While the supply chain has suffered both from top line reduction and margin erosion to maintain activity, the oil price recovery and stability since then has led to material growth in both the US onshore  and Middle Eastern markets, at least from a volumetric basis.

“The offshore rig market is now, after rig retirals, also showing signs of recovery.  Operator clients have recently demonstrated a return to meaningful profits and cashflow. In parallel there has been significant market consolidation amongst the Tier 1 supply chain contractors, change of ownership in the UKCS towards new breed E&P companies, and a trend from some operators to outsource increasing project delivery scopes.

“Altogether we expect more positive investment decisions being made across the industry and believe that both the UK and Norway are leading towards a higher number of projects sanctioned in 2018 over 2017, albeit on a small scale.

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“As such our sense is that North Sea businesses, and the industry as a whole are feeling more confident this year versus last.”

However due to likely project timings Mr Herrera also highlighted the fact that it would be 2019/20 before a significant upturn would be apparent in UK supply chain trading results.

He concluded: “As a super macro, we believe that operators will want to remain price and cost competitive as they seek ways of continuing to reduce further the underlying cost base for CAPEX and OPEX projects.

“Therefore EV is focused on partnering with companies with commercial strategies, services or equipment which can demonstrate more client value at lower costs to deliver growth.

“Against this backdrop we do need the operator community to continue supporting the smaller contractors; companies which are quick to react, innovative, service-based and value-adding.”

Established in 2002, EV Private Equity is an independent growth equity firm applying its specialised expertise to build world-class companies and uncover new technologies in the oil and gas sector.

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