Excessive-profile hedge funds make guess on little-known oil firm
A cluster of high-profile hedge funds are hoping to show around the fortunes of a beaten-down North Sea oil and gasoline agency through which they’ve constructed sizeable positions as power costs soar.
Taconic Capital, CQS and Kite Lake Capital are amongst funds that personal positions in Norwegian Vitality Firm (Noreco), the second-largest oil and gasoline producer in Denmark, whose shares have collapsed by greater than 99 per cent since their pre-financial disaster excessive.
Taconic and Kite Lake between them personal greater than 50 per cent of the corporate. CQS, one in every of London’s greatest funds, in March disclosed a stake of slightly below 13 per cent, with a few of the place held within the fund personally run by billionaire founder Michael Hintze.
Caius Capital and Astaris Capital, a hedge fund launched final 12 months by Martin Beck, former co-founder of Sothic Capital, even have positions, whereas York Capital has additionally been a shareholder.
Noreco has a market capitalisation of simply 3.14bn Norwegian krone (£270m), and is uncommon for having such a excessive focus of hedge funds on its shareholder register.
Final week, the funds additional tightened their grip on the agency, as Peter Coleman of Taconic and Jan Lernout of Kite Lake have been voted on to the board on the agency’s annual assembly.
Noreco was as soon as Norway’s second-biggest oil and gasoline firm by manufacturing, however was hit by the hunch within the oil worth throughout the monetary disaster. The agency has additionally suffered after cracks have been present in one in every of its oil platforms in 2009. In 2018, it misplaced the courtroom case for some $470m it had introduced in opposition to 20 insurance coverage firms it hoped would pay out over the cracks.
However later that 12 months Taconic, Kite Lake, CQS and York helped fund Noreco’s buy of Shell’s Danish upstream property, making it the second-biggest oil and gasoline producer in Denmark.
Hedge funds at the moment are pinning their hopes on what the corporate predicts will probably be a near-doubling of manufacturing by the second half of 2023, helped by the redevelopment of one of many fields it took a stake in as a part of the acquisition of property from Shell.
The transfer to take seats on Noreco’s board was designed to assist administration in growing gasoline manufacturing, mentioned one of many funds.
The worth of Brent crude slumped from $66 on the finish of 2019 however fell under $20 final April because the coronavirus pandemic compelled economies into lockdown. Nevertheless, costs have rebounded to hit $70 this week, their highest in two months, as merchants guess on increased demand as economies open up and worldwide journey slowly resumes.
Funds are additionally hoping they will profit from M&A within the power sector, which has included Chrysaor’s reverse takeover of Premier Oil late final 12 months and Waldorf Manufacturing’s buy of North Sea property from Cairn Vitality in March.
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