Equinor, Faroe swap Norwegian assets
- Business & Finance
Norwegian oil and gas giant Equinor and UK-based Faroe Petroleum have agreed a number of transactions in the Norwegian Sea and the North Sea region of the Norwegian Continental Shelf (NCS).
These transactions are calibrated as a balanced swap when it comes to value with no cash consideration, Equinor said on Wednesday.
In a separate statement on Wednesday Faroe said it had agreed to swap its interests in the Njord, Hyme redevelopment and Bauge development assets in return for interests in four production assets on the Norwegian Continental Shelf: Alve, Marulk, Ringhorne East and Vilje.
Siri Espedal Kindem, Equinor’s senior vice president for Operations North, said: “The net effect of our agreement with Faroe is to upgrade Equinor’s portfolio in line with our updated roadmap for the NCS. We are strengthening our operated position in the prolific Njord area, which we believe continues to have considerable upside potential.
“We remain operator and majority equity holder in Alve which is produced via Norne, another important part of the Norwegian Sea for us. And we are reducing our exposure to non-core and partner-operated assets.”
The Njord field was in production from 1997 to 2016. The platform and the storage vessel have been brought to shore for an extensive upgrade. The field is planned to restart in 2020 and produce until 2040. The remaining reserves for the Njord and Hyme fields are estimated to be 175 million barrels of oil equivalent, while Bauge has a reserves estimate of 73 million barrels of oil equivalent.
The effective dates of the transactions are January 1, 2019 with closing subject to government approval.
Graham Stewart, Chief Executive of Faroe commented: “I am pleased to announce this significant swap transaction which is in line with our stated strategy of delivering shareholder value through active portfolio management. It immediately rebalances our asset mix towards production after a series of exploration successes and resultant development projects. The Transaction will accelerate delivery of our fully-funded production target, while strengthening further our financial position in advance of reaching investment decisions on our new Iris/Hades and Agar discoveries. We are now confident in our ability to deliver in excess of 50,000 boepd in the medium term.”
Stewart added: “The increased cash flow, reduction in capital expenditure and reduction in unit operating cost resulting from the Transaction will further strengthen our already robust balance sheet. This will enable us to give careful consideration to a potential return of capital to our shareholders, as an additional element in our capital deployment mix.”