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Kerogen tests waters for sale of Zennor Petroleum - sources

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LONDON (Reuters) – Private-equity firm Kerogen Capital is seeking offers for its North Sea business Zennor Petroleum from a select number of bidders with the help of U.S. investment bank Citi, industry sources said.

Kerogen has opened Zennor’s books to potential buyers after receiving approaches from some, one banking source said, adding that Britain’s Serica Energy <SQZ.L> could make an offer.

Serica was not immediately available for comment. Kerogen and Zennor declined to comment. Citi had no immediate comment.

Two sources described the move as a “testing of waters” to see how much appetite was in the market for Zennor. Bids can be put forward up until the end of the year, one source said.

Zennor currently produces around 5,000 barrels of oil equivalent per day (boed), but has projects lined up to boost its output by 2023 to around 35,000 boed.

Zennor mainly holds minority stakes in fields around the Britannia and the Eastern Trough Area Project (ETAP) hubs, focusing on subsea tie-backs rather running platforms which require more staff.

ConocoPhillips <COP.N> sold its 58% of the Britannia area as part of its British North Sea portfolio to private-equity backed Chrysaor this year.

Chevron <CVX.N> owns just over 32% as part of a bundle of assets it agreed to sell to Delek Group’s Ithaca Energy.

BP <BP.L> operates six of the seven ETAP fields.

Kerogen, an oil and gas focused private equity fund with offices in Hong Kong and London and with around $2 billion (£1.6 billion) under management, bought Zennor in 2015. It has invested $300 million in Zennor so far, according to Kerogen’s website.

(Reporting by Shadia Nasralla. Editing by Jane Merriman)

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