LONDON — One of the energy industry’s best-known deal makers is quietly making a comeback, even as oil prices continue to slump.
Former BP CEO John Browne is building a new energy company that already has grown into one of the biggest independent European oil producers after two acquisitions.
Now he is pursuing potential opportunities off the coast of Mexico and onshore shale properties in the US, the UK House of Lords member said.
"I like doing deals, but I like also building a company," 67-year-old Lord Browne said in an interview.
Lord Browne’s new company, L1 Energy, is among a group of smaller energy players snapping up exploration and production assets during a nearly year-and-a-half slide in crude prices.
It marks a return to the oil patch for the man who transformed BP from a medium-sized British oil company into one of the world’s largest following the acquisitions of US oil companies Amoco and ARCO announced in 1998 and 1999, respectively, during a previous downturn.
The Amoco deal was the first among a series of megamergers that reshaped the oil industry, with Exxon buying Mobil in 1999 and Chevron announcing its combination with Texaco the following year.
At L1 Energy, a unit of investment fund LetterOne Holdings, Lord Browne serves as executive chairman.
He is backed by about $10bn from Russian billionaire — and erstwhile rival — Mikhail Fridman and his associates with a mandate to build a new international oil company.
"It’s my third chapter in the energy business," said Lord Browne, who founded a renewable-energy fund after leaving BP.
During his tenure as BP CEO from 1995 to 2007, Lord Browne drew fire from fellow oil executives with his appeals to consider climate change as a business risk.
He was dubbed the "Sun King" by the British press as the company’s profile rose.
His Cambridge University education, slight stature and fondness for high culture set him apart in an industry dominated by blunt, larger-than-life executives.
He faced broad criticism after an explosion that killed 15 at a BP refinery in Texas City, Texas, and a leaking pipeline that spilt about 200,000 gallons of oil onto the Alaskan tundra.
Environmentalists chided his rebranding of BP — "Beyond Petroleum", with a green logo — as hollow and criticised him for supporting drilling in the Alaska National Wildlife Refuge.
Lord Browne resigned from BP in 2007 after admitting that he initially lied in a witness statement to lawyers about how he met a former lover during an attempt to stop newspapers from publishing articles about his homosexuality.
It was the beginning of eight years outside the oil business for a BP lifer who spent parts of his childhood near Iranian oil fields, where his father, also a BP employee, worked.
Until recently he had focused on collecting art, writing a memoir, serving in Parliament and launching one of the world’s largest renewable-energy funds at private-equity group Riverstone Holdings, where he was a partner.
L1 Energy’s €5.1bn purchase in March of DEA — German utility RWE oil-and-gas business — brought Lord Browne assets including producing fields in Germany, Norway and Denmark, and exploration licences in Algeria, Egypt and the Caspian Sea offshore Turkmenistan.
In October, Lord Browne oversaw a $1.6bn deal to buy a clutch of oil and gas fields offshore Norway from German utility E.ON.
He also engineered a sale of DEA’s UK gas fields to Swiss petrochemicals company Ineos Group Holdings for $725m, and sold part of its stake in a $12bn Egyptian natural-gas development to its partner on that project, BP.
The moves took L1 Energy’s output up to about 130,000 barrels a day, just under half of Lord Browne’s eventual target for the company.
He still has about $10bn left to spend.
With the exception of Royal Dutch Shell PLC’s planned takeover of BG Group, other oil-and-gas companies such as BP have held back from some deals as they shed smaller assets and sharpen their focus on fewer strategic areas.
A handful of smaller players such as L1 Energy have jumped into the void.
"There’s no question that the current market situation is advantageous to players like us," said Henrik Schröder, partner at upstream-focused investment firm Seacrest Capital Group that in September invested $200m in a new company OKEA to focus on developing oil fields in Norway.
Other firms on the hunt include Neptune Oil & Gas, a new $5bn investment vehicle backed by private-equity firms Carlyle Group and CVC Capital Partners, and Siccar Point Energy, which has $500m for acquisitions.
And Lord Browne isn’t the only former BP chief finding a second act in the oil business: Tony Hayward, Lord Browne’s protégé at BP who was replaced as CEO after the 2010 Deepwater Horizon disaster, now heads Iraqi Kurdistan-focused oil producer Genel Energy.
With Mr Fridman, Lord Browne found a mergers and acquisitions partner in an old rival.
When Lord Browne headed BP, he and Mr Fridman had a sometimes fractious relationship over Mr Fridman’s purchase of the main asset in Sidanko, a Russian oil company in which BP owned a stake.
A partnership in TNK-BP was financially lucrative, but later was marred by disputes between BP and the Russian partners.
Mr Fridman sold his stake in TNK-BP to Rosneft, giving him the money for L1 Energy.
Mr Fridman tempted Lord Browne away from plans to retire after Riverstone, asking him to set up L1 Energy with $10bn seed capital.
"I got this extraordinary approach from Mikhail Fridman. And I thought, what a good idea," said Lord Browne.
A spokesman for Mr Fridman said he wasn’t available for an interview.
There have been bumps along the way.
The previous coalition government in the UK held up L1 Energy’s purchase of British North Sea gas fields from RWE on the grounds that Mr Fridman could be a future target of US sanctions against Russia over the countries’ disagreements on Ukraine.
In April the British government gave L1 Energy six months to arrange a further sale of the US gas fields.
At the time, Mr Fridman said the government’s opposition to the sale was "not rational".
In October, L1 Energy said it agreed to sell the UK oil and gas fields to Ineos.
Lord Browne said acquisitions have been slow this year because sellers still have high expectations for the price they can fetch despite the oil-market slump. He said those attitudes are starting to shift.
"Obviously it’s difficult," said Lord Browne.
"But generally if you look very carefully there are always opportunities."
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Lord John Browne. Picture: BLOOMBERG NEWS/GRAHAM BARCLAY
LONDON — One of the energy industry’s best-known deal makers is quietly making a comeback, even as oil prices continue to slump.
Former BP CEO John Browne is building a new energy company that already has grown into one of the biggest independent European oil producers after two acquisitions.
Now he is pursuing potential opportunities off the coast of Mexico and onshore shale properties in the US, the UK House of Lords member said.
"I like doing deals, but I like also building a company," 67-year-old Lord Browne said in an interview.
Lord Browne’s new company, L1 Energy, is among a group of smaller energy players snapping up exploration and production assets during a nearly year-and-a-half slide in crude prices.
It marks a return to the oil patch for the man who transformed BP from a medium-sized British oil company into one of the world’s largest following the acquisitions of US oil companies Amoco and ARCO announced in 1998 and 1999, respectively, during a previous downturn.
The Amoco deal was the first among a series of megamergers that reshaped the oil industry, with Exxon buying Mobil in 1999 and Chevron announcing its combination with Texaco the following year.
At L1 Energy, a unit of investment fund LetterOne Holdings, Lord Browne serves as executive chairman.
He is backed by about $10bn from Russian billionaire — and erstwhile rival — Mikhail Fridman and his associates with a mandate to build a new international oil company.
"It’s my third chapter in the energy business," said Lord Browne, who founded a renewable-energy fund after leaving BP.
During his tenure as BP CEO from 1995 to 2007, Lord Browne drew fire from fellow oil executives with his appeals to consider climate change as a business risk.
He was dubbed the "Sun King" by the British press as the company’s profile rose.
His Cambridge University education, slight stature and fondness for high culture set him apart in an industry dominated by blunt, larger-than-life executives.
He faced broad criticism after an explosion that killed 15 at a BP refinery in Texas City, Texas, and a leaking pipeline that spilt about 200,000 gallons of oil onto the Alaskan tundra.
Environmentalists chided his rebranding of BP — "Beyond Petroleum", with a green logo — as hollow and criticised him for supporting drilling in the Alaska National Wildlife Refuge.
Lord Browne resigned from BP in 2007 after admitting that he initially lied in a witness statement to lawyers about how he met a former lover during an attempt to stop newspapers from publishing articles about his homosexuality.
It was the beginning of eight years outside the oil business for a BP lifer who spent parts of his childhood near Iranian oil fields, where his father, also a BP employee, worked.
Until recently he had focused on collecting art, writing a memoir, serving in Parliament and launching one of the world’s largest renewable-energy funds at private-equity group Riverstone Holdings, where he was a partner.
L1 Energy’s €5.1bn purchase in March of DEA — German utility RWE oil-and-gas business — brought Lord Browne assets including producing fields in Germany, Norway and Denmark, and exploration licences in Algeria, Egypt and the Caspian Sea offshore Turkmenistan.
In October, Lord Browne oversaw a $1.6bn deal to buy a clutch of oil and gas fields offshore Norway from German utility E.ON.
He also engineered a sale of DEA’s UK gas fields to Swiss petrochemicals company Ineos Group Holdings for $725m, and sold part of its stake in a $12bn Egyptian natural-gas development to its partner on that project, BP.
The moves took L1 Energy’s output up to about 130,000 barrels a day, just under half of Lord Browne’s eventual target for the company.
He still has about $10bn left to spend.
With the exception of Royal Dutch Shell PLC’s planned takeover of BG Group, other oil-and-gas companies such as BP have held back from some deals as they shed smaller assets and sharpen their focus on fewer strategic areas.
A handful of smaller players such as L1 Energy have jumped into the void.
"There’s no question that the current market situation is advantageous to players like us," said Henrik Schröder, partner at upstream-focused investment firm Seacrest Capital Group that in September invested $200m in a new company OKEA to focus on developing oil fields in Norway.
Other firms on the hunt include Neptune Oil & Gas, a new $5bn investment vehicle backed by private-equity firms Carlyle Group and CVC Capital Partners, and Siccar Point Energy, which has $500m for acquisitions.
And Lord Browne isn’t the only former BP chief finding a second act in the oil business: Tony Hayward, Lord Browne’s protégé at BP who was replaced as CEO after the 2010 Deepwater Horizon disaster, now heads Iraqi Kurdistan-focused oil producer Genel Energy.
With Mr Fridman, Lord Browne found a mergers and acquisitions partner in an old rival.
When Lord Browne headed BP, he and Mr Fridman had a sometimes fractious relationship over Mr Fridman’s purchase of the main asset in Sidanko, a Russian oil company in which BP owned a stake.
A partnership in TNK-BP was financially lucrative, but later was marred by disputes between BP and the Russian partners.
Mr Fridman sold his stake in TNK-BP to Rosneft, giving him the money for L1 Energy.
Mr Fridman tempted Lord Browne away from plans to retire after Riverstone, asking him to set up L1 Energy with $10bn seed capital.
"I got this extraordinary approach from Mikhail Fridman. And I thought, what a good idea," said Lord Browne.
A spokesman for Mr Fridman said he wasn’t available for an interview.
There have been bumps along the way.
The previous coalition government in the UK held up L1 Energy’s purchase of British North Sea gas fields from RWE on the grounds that Mr Fridman could be a future target of US sanctions against Russia over the countries’ disagreements on Ukraine.
In April the British government gave L1 Energy six months to arrange a further sale of the US gas fields.
At the time, Mr Fridman said the government’s opposition to the sale was "not rational".
In October, L1 Energy said it agreed to sell the UK oil and gas fields to Ineos.
Lord Browne said acquisitions have been slow this year because sellers still have high expectations for the price they can fetch despite the oil-market slump. He said those attitudes are starting to shift.
"Obviously it’s difficult," said Lord Browne.
"But generally if you look very carefully there are always opportunities."
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