November 1, 2017 / 3:44 PM / a year ago

North Sea firm Chrysaor to begin oil drilling in 2018 after Shell purchase

LONDON (Reuters) - North Sea producer Chrysaor plans to begin drilling for oil and gas in early 2018 after completing a $3 billion (£2.2 billion) acquisition from Royal Dutch Shell (RDSa.L), Chrysaor Chairman Linda Cook said on Wednesday.

Chrysaor became the largest independent oil and gas producer in the Britain’s North Sea following the deal, as new private equity-backed firms gradually take over from long-standing producers in the ageing offshore basin.

Backed by Harbour Energy, an investment vehicle of EIG Global Energy Partners, Chrysaor has already turned its sights to new acquisition in the UK North Sea and beyond, Cook told Reuters in an interview.

“We’re already looking at further acquisitions we can make in the North Sea to broaden and deepen the assets that we have acquired ... We are eager to broaden our geographic scope in Chrysaor to include Norway and Denmark,” she said.

New acquisitions would include operated assets with large reserves, said Cook, who is the chief executive of Harbour Energy and a former senior Shell executive.

Chrysaor will be able to fund many acquisitions through internal cash generation from existing production and Harbour would be able to offer further backing, she said.

Chrysaor, led by Chief Executive Phil Kirk, would also consider an initial public offering but not in the next 12 months, she added.

“If we are able to meet our growth aspirations and shape our portfolio in a way that will be interesting then I think absolutely we could have a very viable IPO candidate,” she said.

Chrysaor aimed to expand production in future to 200,000 barrels of oil equivalent per day (boed) from the current 120,000 boed through acquisitions and developing existing assets, said Cook, without giving a precise date for reaching that target.

Chrysaor, like other new entrants such as Siccar Point and Neptune, says it can extract better value from assets in the North Sea than larger firms such as Shell, BP (BP.L) and OMV (OMVV.VI) through a leaner management structure and smaller work force.

The North Sea, one of the world’s oldest offshore basins that started production in the 1960, remained attractive despite dwindling reserves due to an abundance of infrastructure and services, alongside favourable fiscal terms offered by the British government, Cook said.

Chrysaor now holds stakes in 10 fields and blocks, including the BP-operated Schiehallion field west of the Shetland islands that started production in May and will produce up to 130,000 barrels per day of oil.

Chrysaor is also the operator of the smaller Armada, Lomond and Everest hubs.

Reporting by Ron Bousso; Editing by Susan Fenton and Edmund Blair

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