Last week saw the introduction ACP Energy (LSE:ACPE) to the London Stock Exchange’s Main Market via a Special Purpose Acquisition Company (SPAC). This newly listed company will be focusing on acquiring opportunities within the upstream segment of the oil and gas industry, in areas such as appraisal, development and production, particularly on projects with identified oil and/or natural gas reserves and resources.
ACP Energy will have a particular focus on producing assets that require additional investment to increase the production and reserves base. It also intends to look at producing assets that have not received sufficient investment capital due to either local fiscal issues or previous downturns in commodity prices.
Search for revenue generating assets
These sorts of asset will likely have had some development work undertaken to establish a minimum base of production or resource which, for whatever reason, now requires further funding, in order to either fully develop the opportunity or to either return it to or increase its production. ACP therefore expects it will be looking at opportunities where the asset will be revenue generating, either immediately upon acquisition or within a reasonable timeframe following completion of the work program.
ACP Energy says it does not propose to limit its search to any specific geographic location; however, the geographic location of any investment opportunity will be suitable for institutional investment within the London market. The assets may be located anywhere in the world, but ACP Energy will primarily be looking at opportunities in proven hydrocarbon producing jurisdictions with established oil and gas infrastructure.
An active role in management of assets
Following the completion of an acquisition, ACP Energy expects to be involved in the operations of the acquired business. It reckons those additional opportunities will be available to it by taking an active role in the management through appraisal activity, operational improvements, capacity expansions and funding working capital. Operational management is anticipated to provide superior insight into a particular sector or operating region allowing value accretive complementary acquisitions to be made.
“Given the anticipated sustained strength in commodity pricing, the upstream segment of the oil and gas industry will be an area of focus for investors in our view,” said corporate finance house SP Angel in a note last week. “Paul Welch, in particular, has significant reach in the sector having operated assets in several regions and led successful listed businesses (Chariot, SDX Energy).”
ACP Energy’s long-term aim is to create shareholder value by investing in projects with dependable cashflows and build a portfolio where there is large potential upside in value by providing vital finance and expertise enabling an asset or business to achieve its full potential. ACP is committed to the highest standards of governance and to fulfilling its corporate responsibilities by making meaningful economic and social contributions in the areas where it operates.
“Whilst listing is an important milestone, we now begin the work of bringing our collective experience to bear in identifying significant acquisition opportunities upon which we can grow the business,” Welch said. “At a time of transition in the energy markets, there remains a significant global demand for new sources of oil and gas. Throughout this period, the board is committed to the highest standards of Environmental, Social and Governance practices and looks forward to providing further updates to the market in due course.”
Through its broad range of contacts ACP plans to identify, originate, structure and finance oil and gas transactions that generate value for its shareholders. The company will use its internal research to identify and assess potential opportunities and will then initiate discussions directly or via market contacts and professional advisers.