1947 Oil & Gas (LSE:1947) is building its growth strategy from an operating base, with the recently acquired Renaissance business providing immediate production, cash flow and a platform for further expansion in the Gulf of America.
For newly listed oil and gas companies, the journey from listing to production can often take considerable time. 1947 Oil & Gas is taking a different approach, beginning its growth story with producing assets already in place.
Following its acquisition of Renaissance, the company has an immediate production base of approximately 3,000 barrels of oil equivalent per day across 11 fields, giving 1947 a foundation from which it can pursue its longer-term consolidation strategy.
Speaking on the ADVFN Watch List, 1947 Oil & Gas co-founder and President Ivan Murphy highlighted the significance of starting with a business that is already producing, selling oil and generating cash flow.
“We are producing oil, selling oil, and making money right now,” Murphy said, underlining the company’s focus on building from an established operating platform.
Building from an established production base
The Renaissance acquisition gives 1947 an experienced operational team alongside its existing production base, with the company now looking to build scale through additional acquisitions.
Murphy said the opportunity across the shallow-water Gulf of America is particularly attractive, with 1947 targeting smaller producing opportunities that can be added incrementally to the existing portfolio.
The strategy is to build production through a series of acquisitions, potentially adding assets producing several thousand barrels per day at a time.
Over the next few years, the company is targeting a potential production level of 25,000–35,000 barrels of oil equivalent per day, representing a significant expansion from its current platform.
Rather than relying on a single transformational acquisition, the approach is centred on consolidating a large and established producing region through a series of complementary transactions.
A clean balance sheet provides acquisition flexibility
An important feature of the starting position is that 1947 has no acquisition debt and no hedging in place, while the underlying business is cash-flow positive.
That gives the company flexibility as it looks to pursue further opportunities.
Murphy explained that the existing assets can provide a platform from which the company can use a reasonable level of asset-backed financing to support future acquisitions, while also using additional EBITDA generated by those assets to help fund subsequent growth.
The potential benefit is a compounding model: acquire producing assets, generate additional cash flow and EBITDA, and then use the enlarged platform to pursue further opportunities.
Starting without acquisition debt also gives 1947 greater financial flexibility as it evaluates potential transactions.
Targeting a prolific oil-producing region
The company’s strategy is focused on the Gulf of America, a region with a long-established conventional oil and gas industry and significant existing infrastructure and expertise.
For 1947, this provides the opportunity to pursue assets where production is already established rather than taking on the development risk associated with building a business entirely from undeveloped resources.
The Renaissance team also brings experience of managing the acquired assets, providing continuity as 1947 looks to expand the portfolio.
Murphy described the team as an important part of the company’s platform and said the group is now excited about using 1947’s capital and new ownership structure to pursue further consolidation.
A platform for further growth
The combination of existing production, positive cash flow, an experienced operating team and a debt-free acquisition starting point provides 1947 Oil & Gas with the foundations for its next stage of development.
The company’s ambition is clear: to use Renaissance as the base for a broader consolidation strategy, adding producing assets across the Gulf of America and progressively increasing production.
For investors, the key part of the strategy is that the growth plan starts with an operating business rather than a purely future production proposition.
With approximately 3,000 barrels of oil equivalent per day already being produced and further acquisitions forming a central part of the company’s plans, 1947 is seeking to create a larger, diversified producing platform through disciplined consolidation.
As Murphy put it, the objective is to be producing, generating cash flow and positioned to take advantage of further opportunities in the US oil and gas market.
With Renaissance providing the initial platform, the next phase for 1947 Oil & Gas will be focused on executing that acquisition strategy and building scale.
For more information visit – https://1947plc.com/
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