BLOG - A light in the North

Jock Gardiner, Partner

Those of you of a certain vintage who remember the dark days of 1986 when oil prices were at a low ebb and the doom and gloom merchants were predicting Armageddon for the North Sea oil industry may also recognise the title of this article (no clues at this stage so keep on reading ……..)

Fast forward three decades and the doom and gloom merchants are back as Brent crude oil prices have fallen to five year lows of $65 per barrel. 

However, whilst I am based in the oil city of Aberdeen and very aware of the current industry climate as we live and breathe it 24 hours a day/7 days a week, I am not a subscriber to the negative sentiment mentality. Maven remains of the view that the energy service sector has excellent medium to long-term prospects and fully intend to take advantage of the opportunities arising during all phases of what is a cyclical industry.
Indeed very recent evidence of what can be achieved by investing in high quality oil service SME companies has been demonstrated with our recent exit of EFC Group, which we sold to a consortium of investors for a 3.8 times money multiple in November 2014.

Maven’s portfolio of energy services sector investments is currently performing strongly and whilst 2015 is forecast to be a challenging year for the industry the prospects for many of our companies appear to be encouraging. 

The key attributes of Maven’s investment style stand us in good stead such as the defensive structuring of our deals, whereby only two of our energy service sector investments have (a modest level of) senior bank debt and the bulk of our investment is by way of yielding secured loan stock instruments. 

The entrepreneurial and proactive management style exhibited by Maven’s stable of energy service investments which are in niche, high margin, defensive sub-sectors of the industry are all attributes that contribute to the robustness of the portfolio. All of our companies (which focus on operating expenditure in the inspection, repair, maintenance, integrity and ongoing production arenas) are headquartered in the UK but operate on a global basis thereby offering some insulation from the cost-cutting and capex reduction programmes currently ongoing in the North Sea region.

Maven are long-standing private equity investors in the energy service sector and our investment team have generated a 2.5x money multiple investment return across all investments since the mid 1990’s. We are experienced investors and remain consistent to our core values of making well-priced new investments whilst managing our portfolio of companies in a supportive “hands on” manner.

Returning to the title, which to those readers who follow football may know that it is Alex Ferguson’s first autobiography on his time at Aberdeen Football Club. At Maven we firmly believe that there is a strong “Light in the North” and we are endeavouring alongside the management teams of our portfolio companies to ensure that it continues to shine brightly in the years ahead.

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