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He abdicated from Regal but he’s still in energy’s Vanguard

The Independent

As Shell circles his old company again, Neil Ritson tells Mark Leftly of his plans for another oil firm

Sunday, 5 October 2008

 

As the share price of Regal Petroleum, the London-based but Ukraine-focused oil producer, surged amid reports that Royal Dutch Shell was mounting a $1.2bn (£680m) bid for the company, a heavily moustached 52-year-old was watching the move with surprise.

 

Neil Ritson, the former chief executive of Regal, could not make sense of it when he read Friday’s report. Last year he had put together a $410m deal to sell a 51 per cent stake in Regal to Shell, but left before the deal collapsed in November. And now Shell appeared to be willing to pay “three quid” a share when they were worth little more than 80p.

In a statement to the London Stock Exchange later on Friday, Regal denied the approach.

In all the excitement, Mr Ritson’s role in the original deal was largely forgotten. Shell pulled out when Mr Ritson and chairman Francesco Scolaro resigned, and a new management team declared it would review its option on the sale.

Mr Ritson has also been quietly plotting his way back into the mainstream of the industry. Taking Regal finance director Gordon Stein and chief operating officer Dave Scott with him, he incorporated Vanguard Energy a week after resigning.

Mr Ritson laughs that he has been “working my way down” since 1999, when he was at energy giant BP. Vanguard is quite a specialist proposal: it seeks out large, discovered oil and gas fields which it can then develop further. This is not an exploration company, and it focuses on areas where it sees political stability and a relatively light regulatory burden, including the UK, France, Italy and Egypt.

Although no purchases have yet been made, the company has deep pockets due to its Boston-based private equity backers. Vanguard has $500m at its disposal, meaning it can outmuscle its typically listed rivals: there are well over 100 oil- and gas-related companies on the junior Alternative Investment Market, the vast majority of which are struggling to raise cash as their shares collapse.

“Private equity was interested in us because traditional levered deals were not available,” says Mr Ritson. “We showcased to eight or nine American private equity groups in May, and had a deal signed less than a month later.”

The upward trend in commodity prices made Vanguard an attractive proposition as private equity purchases in areas such as retail and industry started to fall away as a result of the credit crunch. “We have the ability to access capital, which lots of listed companies simply don’t at the moment,” he smiles.

Mr Ritson, a geophysicist graduate of Southampton University, says that he expects to make his first purchase within six months. This could be as much as $300m, “plus or minus $100m either way – that’s the sweet spot”. Although this would soak up most of the company’s cash, Vanguard would refinance the purchase with bank debt when the market picks up. This would then be used for further acquisitions.

But Mr Ritson will not be with Vanguard for the long term. He is hoping for an exit strategy – be it a listing or a sale – in three to five years. Maybe it won’t be a surprise to pick up a paper around 2013 and find a report claiming that Vanguard is to be snapped up by Shell for $1.2bn.

http://www.independent.co.uk/news/business/analysis-and-features/he-abdicated-from-regal-but-hes-still-in-energys-vanguard-951397.html

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