SeaEnergy focuses on marine business after £31 million sale of wind farms arm

The planned sale of its offshore wind farm business provides Sea Energy (LON:SEA) with the capital to grow its marine operations, according to Gurpreet Gujral of City broker Ambrian Capital.  

The group, which started life as oil exploration group Ramco Energy, has aspirations of becoming a service provider to the offshore wind industry rather than developing the heavily capital intensive schemes itself.

Key to this will be the £29.1 million it will be left with following the sale of SeaEnergy Renewables Limited for £30.7 million to subsidiary of Spanish oil giant Repsol.

The deal with Repsol Nuevas Energias will also see the AIM-listed group recover the £8.1 million invested in the business. 

The company itself puts the enterprise value of the deal at £50 million.

Chairman Steve Remp said: “The time is right for us to capitalise on this success.  

“This deal allows us to continue to participate in the fast-growing UK and European offshore wind markets, and to build on our enviable track record of working with some of the world's biggest companies.

"We believe that our nascent Marine business has a unique vessel concept that will make a material difference to the commercial economics of offshore wind.  

“We look forward to pursuing this exciting opportunity, and to seeking out other projects to leverage our expertise."

The remaining shares held by SERL's management will also be acquired by Repsol. 

SERL has an interest in three off-shore windfarms. The Spanish firm is teaming up with with EDP Renováveis to develop a further two projects.

The shares fell 26.5 pence, or 38 per cent, to 43 pence as investors digested today’s announcement. 

However this should be set against an 80 per cent rise in the stock in the year to date. It means the firm is worth little more than the cash if expects to receive from the sale of SERL.

Ambrian’s Gujral remains upbeat on the company’s prospects. 

“SeaEnergy’s sale of its interests in SERL provides it with the much-needed capital to build out its Marine business, which we believe is likely to generate shareholder value quicker than the offshore wind assets,” she said in a note to clients. 

The company said last year said last year it had been forced to place SERL up for sale because it had found it tough to raise the necessary capital to develop the business. 

“In an equity market which does not yet appreciate the huge opportunities afforded by offshore wind, we have chosen to create our own equity for future investments in the sector by crystallising the value we have created in our SERL subsidiary,” Steven Bertram, SeaEnergy’s managing director, told Cleantech Investor earlier this year.

SeaEnergy believes becoming a service provider to the industry will ultimately be a quicker means of generating cash flows and profits from the offshore wind industry.

The work involved in servicing the expansion of offshore wind in the UK includes not only turbine assembly and installation, but also the building of foundations for turbines, laying and connecting electricity cables, as well as maintenance of the turbines once they are installed.

Over the past decade several companies have emerged with a specific intent to play a role in servicing the UK’s offshore wind industry. 

These include businesses like MPI Offshore, whose 14,000 gross tonnage MPI Resolution is the world’s first purpose-built vessel for installing offshore wind turbines and foundations, and North Sea Logistics, an operator of specialist vessels that transfer personnel and equipment to and from offshore wind turbines.

There should be plenty of room for SeaEnergy too, according to The Offshore Valuation Group (a coalition of government and industry organisations). 

A recent report by the group forecast that 145,000 new jobs would be created in the UK if only a third of the total available offshore resource could be exploited, while the electricity generated would be equivalent to that produced by one billion barrels of oil (matching North Sea oil and gas production).

The sale leaves Renewable Energy Generation as the only quoted, pure play wind power group in the UK.