Between sips from champagne flutes, grown men shed tears in the Granite City.
More than 150 employees, lawyers and accountants of the North Sea gas group Venture Production crammed into the Soul Bar, a converted church in Aberdeen's Union Street.
"It was like saying goodbye to your family," remembers Mike Wagstaff, who was leaving with nearly £20m after five years of impressive stewardship and who had hired most people in the room. His wife gave the men a run for their money, crying bucketloads of tears. Still, Wagstaff insists, "it was a great party".
And Wagstaff needed to let his hair down. For months, he had fought to keep Venture independent, or at least get Centrica, owner of British Gas, to pay £9 a share. Wagstaff had only one weekend off between March and August, a trip to Venice where he spent all his time on the telephone to advisers.
Despite his efforts, Venture succumbed and Centrica secured the group for £1.3bn. At 845p a share, it was a perfectly pitched price: lower than investors felt the company was worth, but not low enough to risk losing out on a big pile of cash.
Conquered, Venture delisted its shares on the London Stock Exchange last October. Just after the first anniversary of the purchase, Centrica announced an interim management statement this month that indicates the acquisition might just be chief executive Sam Laidlaw's masterstroke. The announcement also suggests Wagstaff was quite right: that shareholders should have held out for more cash.
Laidlaw wanted Venture, as it gave Centrica access to vast gas supplies in the North Sea. Despite holding 3-4 per cent of the world's gas reserves, the UK has been a net importer since 2004. This leaves companies like Centrica open to gas price volatility – but this could be contained by securing reserves on its doorstep.
Venture was a risk-taking business. It would buy up fields that the majors had discarded, areas where the gas was hard to access. Using state-of-the-art technology and modern production practices, Venture engineers would break obscurely angled bedrock to get at the gas. For example, Venture fractured reservoirs by using sand and managed to get gas from a two-decade dormant field where 10 previous operators had tried and failed.
The management statement this month showed that 10 out of 14 wells drilled this year have found gas. But what is more impressive is that five came from eight wells known as "pure exploration plays", meaning that the fields were uncharted. A success rate of one-in-three is considered pretty good. The complexity of the sites means drilling wells can cost up to £50m, so to strike gas more than half of the time is also vitally economic.
There was a lot of technical expertise in Venture, which was to become the bulk of the Centrica Energy's upstream division, and the only way of getting these kinds of success rates was by holding on to its best people.
Venture's chief operating officer, Jonathan Roger, met Centrica Energy's managing director, Mark Hanafin, at his Windsor offices within a day of Venture losing its independence. Roger left ConocoPhillips, the Texas-based oil giant, to enjoy the freedom and flexibility of an independent company: "Venture had been keen to survive on its own two feet. We were concerned at what would happen when a much bigger company came in."
A major worry was that Centrica didn't always act as the operator at its gas fields, whereas Venture never sub-contracted out that role. "Venture was very entrepreneurial. How do you integrate these companies effectively?" asks Paul de Leeuw, a Venture man who is now strategy director at Centrica Energy's upstream division. A senior oil and gas figure says that Centrica "used the deal as an opportunity to shake out its organisation and bring it up to date". Venture's way of doing things would generally take precedence over Centrica's.
Roger agreed to stay on for about six months – the other three Venture directors left – and become part of a team overseeing the integration. A 100-day plan to 1 January was drawn up to look at organisation design, such as how to run the human resources department. Venture was soon rebranded with the Centrica Energy motif appearing on Venture's offices within weeks. It now makes an odd sight – a FTSE 100 name on the same street as a pub called Filthy McNasty's.
"We wanted to create one identity – if people said that they used to work for Venture or Centrica, it could prove quite destructive," says Roger. "We wanted to create something new."
Roger recognised that the beefed-up division was the vital, final link in a chain that took Centrica through the energy cycle from drilling to selling to households. There was a sense that the unit would remain opportunistic, with £2bn of acquisitions – including Venture and the later purchase of Shell's 13,300 barrels of oil equivalent (gas) stake in Statfjord field – bulking up the division.
Roger was persuaded to stay on to head up the Aberdeen operation. "It was a personal, emotional rollercoaster. My plan was to go off and do something else, but when I took interim control I found I really enjoyed it."
De Leeuw says that Roger's decision provided the last bit of stability staff needed. Apparently, Wagstaff had told Laidlaw late last year that he would end up hiring Roger – that the external recruitment process would not turn up a better candidate.
Not everything will be done the Venture way. As part of a bigger company, some of Venture's smaller, more curious assets have become uneconomic. Centrica has opened the data room – these days a secure website rather than a physical space where acquisition experts go through hundreds of dusty files – to potential buyers of £400m of North Sea gas fields.
As well as developing existing assets, which include fields in the Netherlands and Norway, Roger has now been charged with building what would already be a borderline FTSE 100 company in its own right into an international force. Recently, the upstream division has bought into Trinidad. "I've got an eye on where we go next," says Roger. "We're looking at the possibility of international expansion."
With little fanfare, Centrica is creating a gas exploration and production unit that will drive its growth for years to come. At £1.3bn, Venture was a snip. No wonder hardened industry vets were reduced to tears.Reuse content