The Australian Financial Review
Article Published: 8 October 2012
Barclays Bank-backed private equity firm Hydra Energy has taken more than two years to make its first acquisition but chief executive Paul Nimmo expects to complete more in the near future to build up its oil and gas business in Australia.
After examining more than 150 potential transactions around Australia and south-east Asia since Hydra was set up in May 2010, a deal to acquire Pan Pacific Petroleum’s interests in small oil and gas discoveries off north-west Australia was revealed on Friday.
That should be followed up with more transactions now that sellers seem to have become more amenable to letting go of some assets, Dr Nimmo told The Australian Financial Review.
“Up until now, we haven’t really found anything that really suited us or has been available at the right price – the market has been fairly competitive for the last couple of years,”
Dr Nimmo said.
“This one and others that are on foot at the moment will get us off to a flying start in Australia.”
Hydra’s primary focus is on undeveloped, small fields that are non-core for larger players, but it is also looking at late-life assets in and around Australasia where it believes it can extend field life.
Backed by $US100 million ($98 million) from Barclays Capital, the deals under way will still leave some scope for further acquisitions.
A former executive of Royal Dutch Shell, CIBC World Markets and Horizon Oil, Dr Nimmo has a senior management team that includes fellow former Horizon executive Danny Morgan, and energy asset valuation and merger and acquisitions specialist Ian Dunderdale.
The board is led by non-executive chairman Andy Rigg, the deputy chairman of Mosaic Oil before its takeover by AGL Energy.
Dr Nimmo said the focus of some companies in Australia on larger gas projects costing hundreds of millions if not billions had thrown up opportunities to acquire much smaller assets lying their books.
As a result, assets that Hydra had made approaches to acquire 18 months ago but got no traction were now under active negotiation.
“I guess it’s the way the dynamic has changed in Australia,”
“Some of the companies we are dealing with have big gas to develop. The sorts of assets we are interested in are on their books lying fallow. Now we are finding there’s a lot more interest in trying to find a commercial solution.”
The assets Hydra is buying from Pan Pacific comprise small undeveloped discoveries in the Carnarvon Basin, including stakes in the Maitland resource north-west of Barrow Island, and in the Sage, Corvus, Tusk and Taunton oilfields.
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