Wednesday 22 February 2012
Shell to buy Cove oil
In this year's early bubble, confidence is back and also the major oil producers have not been so successful themselves with their own drilling. Indeed, a pharma-type industry model is rapidly developing where exploration is done by small companies and then the big guns arrive to develop the actual production.
Of course, this has always happened to some extent, but with oil resources rapidly depleting (until shale oil really gets going in a few years), the SuperMajors have struggled with their own exploration - and this is despite huge improvement in seismic scanning and other technologies that de-risk so called 'wild cat' drilling.
Another noted impact is that the AIM companies are back in favour, despite the lack of change in bank funding which caused them to collapase int eh first place. A high price for oil, now above $100 a barrel for an extended period of time, seems to have improved confidence that economic production can take place.
Last year saw the takeover of Encore, now Cove too. Ithaca is subject to a bid. It is a busy year for North Sea M&A and I need to develop a bigger watch list as this period of consolidation is likely to go on for some time.