Indeed, UK family offices view this ability as a competitive advantage over private equity firms that must exit quicker.
Many UK family offices are looking for either common equity or structured equity deals, yet some do engage in debt deals by lending to oil and gas companies as part of syndicates.
Clubbing up
Also similar to US family offices, UK counterparts have been known to 'club up' on larger deals.
Certain London-based family offices have tapped pre-existing relationships with each other to follow the lead of more experienced family offices active in US oil and gas.
They also have sometimes clubbed with US family offices, when introduced by trusted third parties with in-depth knowledge of the space.
For example, transactions that require approximately $200mn in equity are sometimes addressed by a club in which one family office tends to act as an experienced and credible anchor by funding at least one-third of the deal.
That anchor also often serves as the lead for other family offices to follow, as a result of its ability to properly value opportunities or its access to technical talent that can assist with valuations.
The rest of the family offices in the club may provide at least $20mn per deal.
Of course, these followers will conduct their own due diligence, albeit usually to lesser extents than the initial anchor.
Many variables
Although these trends are expected to continue in 2024 and beyond, market participants are assessing a wide array of variables.
For instance, taxation is a financial consideration for UK family offices engaging in cross-border oil and gas deals.
However many of the groups already have US-based investments – potentially in other sectors – and therefore are somewhat familiar with how to structure deals to minimise US tax obligations.
Regulatory issues, such as plugging and abandonment liabilities for working interest owners and operators, may induce family offices to pursue investments in oil and gas minerals that have less exposure to such liabilities.
The COP28 UN Climate Change Conference in Dubai from November 30 to December 13 included a non-binding roadmap for “transitioning away from fossil fuels".
Even so, the language from COP28 lacked country-by-country specifics on steps to achieve that goal.
Keith Behrens is head of energy and clean energy transition at Stephens Investment Banking
