Acquisition-thirsty private equity sees big North Sea optimism

Hitec Vision, Norway's largest private equity firm dealing with oil and gas, takes an optimistic view on the future of the North Sea. Meanwhile, it is preparing to divest from several assets.

Photo: Hitec Vision

Norway's largest private equity firm dealing with oil and gas thinks the offshore sector could be approaching the end of its downturn.

When the price of oil started to decline in mid-2014, Hitec Vision saw several acquisition opportunities. The private equity firm has since invested more than 40 billion in the North Sea, making it one of the the most prominent investors in the Norwegian and British North Sea.

While Hitec Vision's management previously explained that the downturn has lasted longer than anticipated, they now see signs of improvement, the firms informs in its 2018 annual financial statement, which shows a profit of NOK 154.7 million (USD 18.13 million) against NOK 108.2 million in 2017.

"The global oil industry, including Norway's, was marked by a strong downturn in the years after 2014, but 2018 has provided the basis for renewed optimism in the whole industry. An extensive rationalization in the industry has driven down costs and increased profitability for existing production as well as from possible field expansions.

One of Hitec Vision's largest investments was oil company Vår Energy. Vår was founded last year when the former merged oil company Point Ressources with Italian Eni's Norwegian business. The firm also owns a large stake in oil company Cape Omega as well as a series a oil service companies.

"Cash flows to the portfolio's oil companies have improved, and increased activity levels are having an impact on the order books and results of several oil service companies in the portfolio," the firm wrties.

Particularly oil service companies, many of which were purchased before the downturn in 2014, have burdened Hitec for quite some time. Now they will be sold bit by bit, and multiple sales could to take place this year.

"It has not been possible to realize investments for acceptable prices during the oil industry's recent years of downturn. That now appears to be changing, and a number of possible realizations are being prepared for 2019.

English Edit: Daniel Frank Christensen

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