UK upstream independent oil companies league table highlights strength in sector

23 February 2011

• 28% increase in the market capitalisation of the 25 biggest companies in the sector from £25.3bn to £32.2bn
• Significantly out-performed the oil majors, the market and the oil price over last 10 years
• Biggest mover is Cove Energy up 39 places

Deloitte, the business advisory firm, has produced its second full year ranking of UK upstream independent oil companies, based on market capitalisation. The ranking will be launched at International Petroleum Week today.

Ian Sperling-Tyler, associate partner of energy transaction services at Deloitte, said: “We have seen a great deal of volatility in the ranking showing the transformational growth achievable through exploration success. Overall, 2010 was a year of recovery for the UK upstream independent oil and gas sector, with rising oil prices and greater access to capital improving investor sentiment in the sector.

“The improved environment was reflected in a 28% increase in the market capitalisation of the 25 biggest companies in the sector from £25.3bn to £32.2bn. In contrast, the FTSE 100 posted a 9% gain.”

Appetite for deals returns
Ian continues: “There will be significant deal activity in 2011, both between independent oil companies and also purchases by national oil companies, as companies look to benefit from the favourable upturn in the environment by expanding their exploration and production portfolios.

“The 2010 reporting season has given even greater visibility as to which companies are in a strong position and which are not, creating the conditions for a return to deal-making in the sector.

“Investors will continue to support strong management teams with a proven track record and attractive acreage.”

North Sea
The Dana deal highlighted one of the key themes of 2010 – the revitalisation of the North Sea. Although Dana has disappeared from the table, other North Sea players had a good year. Premier Oil consolidated its position as the third-biggest company in the sector, helped by its discovery of the Catcher field, which is estimated to hold potential reserves of up to 40-80m barrels.

Exploration in Africa leads to strong gains for Cove Energy and Chariot Oil & Gas
In Africa, Tullow’s strength in Ghana helped it to maintain top spot in the sector. It’s £11bn market capitalisation is more than twice the valuation of its closest rival Cairn Energy, which in turn is more than twice the size of the No. 3 company, Premier Oil.

Other companies fared well in Africa, partly as a result of new discoveries and partly in response to the retreat of the supermajors from areas such as Nigeria. Cove Energy went from 60th place in the table to 21st on the back of discoveries in Mozambique and Tanzania, while Namibia proved fertile territory for Chariot Oil & Gas, following reported increases in their prospective reserves over the year (20th place, up from 41). Afren’s policy of buying assets in western Africa that were once held by the majors paid off after it announced its production would double by 2011 and took it to fourth place in the sector.

Greenland still to bear fruit
Cairn has agreed to sell its Indian interests to Vedanta but maintained its position as the second-biggest company in the sector thanks to its strong position in Arctic exploration – however its’ drilling off the coast of Greenland has yet to bear fruit.

Falling out of the top 25:

• Dana Petroleum - takeover by KNOC
• Sterling Energy – down to 26 from 11
• Desire Petroleum - down to 28 from 14
• Regal Petroleum – down to 34 from 16
• Hardy Oil & Gas - down to 29 from 20

Companies moving into the top 25:

• Enquest – in at 8 following listing in April 2010
• Rockhopper Exploration – in at 9 (up from 26)
• EnCore Oil – in at 16 (up from 34)
• Nautical Petroleum in at 17 (up from 42)
• Aurelian Oil & Gas plc – in at 18 (up from 29)
• Chariot Oil & Gas plc – in at 20 (up from 41)
• Cove Energy – in at 21 (up from 60)
• Petro Matad – in at 24 (up from 48)

-Ends-

Notes to editors

Full list

The upstream independents league table has been compiled from the London Stock Exchange ‘List of All Companies’ applying the following section criteria:

• Sector: Oil and Gas Producers
• Sub-sector: Exploration & Production
• Country of incorporation: UK
• Market: Main and AIM
• Ordinary shares: Yes
• Market capitalisation £m highest to lowest value for top 25 companies
• A direct comparison has been made between the end of December 2009 and the end of December 2010.

About Deloitte

In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities.

Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

The information contained in this press release is correct at the time of going to press.

Member of Deloitte Touche Tohmatsu Limited.

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