North Sea private equity-backed Chrysaor's talks to buy smaller regional rival Siccar Point have ended after a large gap between their price expectations, three sources close to the process said.
The breakdown in negotiations highlights difficulties oil and gas producers are facing with the long-term outlook for prices uncertain as economies shift away from fossil fuels.
Chrysaor offered around $1.6 billion to acquire Siccar Point in the second bidding round on Jan. 13, the only bid to acquire the entire company which is backed by private equity firms Blackstone and Blue Water Energy, the sources said.
Siccar Point's owners are seeking around $3 billion, but a drop in oil and gas prices in recent months and a weak outlook for prices, particularly for natural gas, have led bidders to lower their offers, the sources said. Siccar Point also had bids from a number of buyers to acquire parts of its assets. It was not immediately clear if any offers will be accepted.
Siccar Point, Blackstone, and Chrysaor declined to comment.
EIG-backed Chrysaor became the North Sea's largest producer after acquiring large portfolios from Royal Dutch Shell in 2017 and ConocoPhillips last year. Siccar Point became a major North Sea player after acquiring OMV's portfolio for $870 million in January 2017.
Its owners have not disclosed how much they have since invested.
With around 600 million barrels of oil equivalent (boe) in resources and reserves, Siccar Point expects its output to reach about 80,000 barrels of oil equivalent per day (boed) by about 2027 from just over 10,000 boed currently, mostly through the development of major new fields.
(Reporting by Ron Bousso; Editing by Alexander Smith)
Read more: