Multimillionaire oil and gas entrepreneur Larry Kinch has pulled off another big deal by selling his Aberdeen-registered fracking company Aurora Production.
The overall value of the sale by Aurora Production’s parent, Aurora Petroleum, to London-listed energy company Egdon Resources was undisclosed.
Aurora Petroleum was controlled by Mr Kinch via Jersey-based companies.
Completion of Acquisition of Aurora Production (UK) Limited https://t.co/0nPfkP2pyp pic.twitter.com/nRzPeOtGYz
— Egdon Resources plc (@EgdonResources) March 2, 2023
Egdon said it was assuming all ongoing liabilities, including those for future abandonment, in respect of Aurora Production interests in assets in the south of England. These include stakes in the Waddock Cross and Avington onshore oilfields.
This applies from the commercial date of the transaction, which is September 30 2022.
Other deal terms
Egdon has also received £288 million, less certain costs, from Aurora Petroleum, which “reflects the current estimate in relation to the abandonment liabilities”.
Aurora Petroleum will receive 10% of any profits generated by the licences acquired by Egdon and also be reimbursed the £288m it paid in the event of profitable production.
In addition, Aurora Production has accumulated upstream ring-fenced tax losses totallling around £90m, which Egdon said could be used to offset tax on future profits.
Egdon managing director Mark Abbott said: “We are pleased to have completed this acquisition, which builds on our existing interests in the Waddock Cross and Avington oilfields. Both assets have active plans in place to rejuvenate oil production.
“The acquisition therefore adds potential for near-term incremental production, adds to our resource base and delivers substantial tax losses that may be utilised to offset future taxes.”
Egdon also has licences in the North Sea, which were dealt a blow last April due to the withdrawal of operator Shell.
Who is Larry Kinch?
Mr Kinch is one of the North Sea oil and gas industry’s best known serial entrepreneurs.
The son of a Canadian soldier who fought in World War II and an Aberdeen mother, he was raised in Aberdeen.
When he left school, he went through an engineering apprenticeship sponsored by the paper mill where his father worked and qualified just as North Sea oil was hitting the headlines.
His first job in the industry was as a service engineer with Schlumberger, exploration well testing from semisubmersibles in Denmark, Norway and the UK.
Big money deals
He went on to work for firms including Shell and BP before founding Aberdeen-based oilfield equipment and service company Petroleum Engineering Services (PES) in 1985.
PES was sold to US company Halliburton for £111m in February 2000, with Mr Kinch reportedly receiving around £25m.
The Robert Gordon University honorary degree-holder made a further £93m from the sale of Venture Production in a £1.3 billion takeover by Centrica in August 2009.
According to the Corporate Watch website, some of his fortune has been spent on a 50-acre estate and fancy cars, as well as launching his shale-focused Aurora empire in 2009.
Fracking, also known as hydraulic fracturing, is a technique used to get oil and gas out of the ground.
Water, sand and a cocktail of chemicals are pumped deep underground at high pressure to open up cracks, or fractures, in the rock – releasing any oil or gas trapped inside.
Fracking has been banned in Scotland since 2015, while the Scottish Government continues to consider the potential impacts.
Conversation