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UK upstream independents league table 2012 - Half year update

Key extracts

Overall market capitalisation of the top 25 UK upstream independents rose 6.8% from £27.8bn at 1 January 2012 to £29.7bn at 30 June 2012. This increase was in contrast to the decline of global crude benchmarks, Brent Crude declining by 13%, reflecting concerns about a Chinese slowdown and ongoing instability in the Euro-zone, partially off-set by the continuing impact of the Arab spring, threats to shipping through the Strait of Hormuz and sanctions against Iran and escalating violence in Syria - which resulted in the departure of Syrian focused Gulfsands Petroleum from the top 25.

Companies such as Ophir Energy and Cove Energy which are focused on East Africa have benefitted from the interest in this ‘new frontier’ and the positive news flow of significant discoveries such as those in Tanzania and Mozambique. These discoveries are of a size that starts to make the significant infrastructure investment required for export economical, especially with the geographical proximity of the resource hungry Indian and Asian markets. Cove Energy jumped seven places in the period, driven by the competitive bid process between Shell and PTT, continuing the theme of NOCs, which are often prepared to pay a significant premium, successfully competing with Supermajors for access to resources. Even taking into account its solid operational performance, Amerisur Resources eight place improvement poses the question as to whether investors could be turning to South America as the next ‘new frontier’.

By contrast, those who have dropped down the ranking include Exillon Energy (11 places), Heritage Oil (four places), Fortune Oil (three places), and JKX Oil & Gas (three places).

M&A levels amongst the top 25 improved in the first half of 2012, with Encore Oil leaving the table following its acquisition by Premier Oil, Cairn making an offer for Nautical Petroleum (ranked 13) and Ophir Energy  acquiring a smaller competitor. This may also reflect the start of a trend to re-enter or bolster North Sea operations following greater certainty around decommissioning, recent drilling success and the economics of $100 Brent Crude.


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