Outlook for the UKCS in 2006

Asset Trading and New Entrants

The UKCS has seen a healthy level of asset trading in the last decade with 1 billion boe being traded on average each year. There has, however, been a slow down in the asset transfer market since the peak in 2000 with only 700 million boe a year being traded, seemingly because the current era of global mergers has come to an end.

Figure 40: UKCS Asset Transfer 1993-2005

Over the last decade about 50 deals a year have taken place, the buyers comprising existing large and small players as well as new entrants. Over the period, commercial activity was equally split between existing large and small buyers. However, the number of deals where the buyer is an existing large player has fallen with time.

Figure 41: Buyers of UKCS Assets 1995-2005

Figure 42: Production and Expenditure by Type of Participant 1999-2008

Production

Expenditure (Capex, Opex and E&A)

The contribution of small participants (production of less than 20 thousand boepd in 2005) has increased since 1999, in terms of both production and expenditure. The share of production accounted for by the majors (production of more than 200 thousand boepd in 2005) has fallen over recent years; however expenditure by majors appears to be increasing as a proportion of the total over the next two years. It is estimated that large and medium sized companies will account for over half of production in 2008.