ExxonMobil sells Norway offshore fields to Vår Energi for $4.5 billion

ExxonMobil has agreed to sell its offshore oil field interests in Norway to Vår Energi for $4.5 billion.

Illustration: Statfjord field platform; Image by Harald Pettersen/Equinor
Illustration: Statfjord field platform; Image by Harald Pettersen/Equinor

The U.S. major on Thursday said the deal was part of its plan to sell $15 billion worth of non-core assets by 2021.

ExxonMobil will sell its interests in more than 20 producing fields to VårEnergi. Most of these fields are operated by Equinor, including Grane, Snorre, Ormen Lange, Statfjord and Fram, with a combined production of approximately 150,000 oil-equivalent barrels per day in 2019.

In 2017 the company sold its ownership interests in the ExxonMobil-operated fields Balder, Jotun Ringhorne and Ringhorne East to Point Resources.

The ExxonMobil refinery in Slagen and network of approximately 250 independently owned Esso-branded retail sites are unaffected by the agreement, ExxonMobil said.

Neil Chapman, senior vice president of ExxonMobil said: “Our objective is to have the strongest, most competitive Upstream portfolio in the industry. We’re achieving that by adding the best set of projects we’ve had in many years and divesting assets that have lower long-term strategic value. This sale is an important part of our divestment program, which is on track to meet our $15 billion target by 2021.”

Vår: 2nd largest E&P company in Norway

In a separate statement on Thursday, Vår Energi said the ExxonMobil transaction would make it the second-largest E&P company on the NCS after Equinor, with total reserves and resources of about 1,900 million boe.

“Total production is expected to be about 300,000 boepd in 2019, growing organically to more than 350,000 boepd in 2023 as the company invests about USD 7 billion in development projects such as Johan Castberg, Balder X and Grand in the 2020-23 period,” the Norwegian oil & gas company said.

The majority of the about 50 employees working on the acquired assets are expected to join Vår Energi, a company formed in December 2018 via a merger between Eni Norge and Point Resources.

Commenting on the deal, Claudio Descalzi, CEO of Eni, said: “The transaction delivers a key strategic objective for Vår Energi. The acquired assets complement and strengthen Vår Energi in core areas well known to Management and open up new opportunities for growth. As a shareholder, we are pleased that the company becomes the second-largest oil and gas company and Equinor’s largest partner in Norway, and look forward to delivering on the still tremendous potential of the NCS.

“In one year, we have completely restructured and strengthened the Eni presence in Norway by creating a strong Norwegian partnership based on the shareholders’ alignment on strategy and objectives. Furthermore, in coherence with Eni’s strategy, the increase in OECD production will contribute to Eni’s rebalancing of geographical exposure.”

Vår Energi will fund the transaction from existing cash resources and a Reserve Based Lending debt facility which has been fully underwritten by BNP Paribas and will subsequently be syndicated.
The acquisition has an effective date of January 1, 2019 and is expected to be completed in Q4 2019 subject to standard conditions precedent, including customary approvals from regulatory authorities.

Biggest deal since 2006

Energy intelligence group Wood Mackenzie said the ExxonMobil-Vår Energi transaction was Norway’s biggest deal since the Statoil-Norsk Hydro merger in 2006.

Neivan Boroujerdi, principal analyst, North Sea, at Wood Mackenzie, said: “We think ExxonMobil has achieved an attractive exit price. It reaffirms that Norway is still one of the most competitive M&A markets in the world.

“It also reflects the attractiveness of the high cash-generative portfolio. The acquisition is transformational for Vår Energi. Production for 2019 will increase by nearly 100% to just over 300,000 barrels of oil equivalent per day, making the company Norway’s second-largest producer.”

He added: “ExxonMobil’s exit brings an end to one of the industry’s longest-running stories – the supermajor was awarded the first license ever awarded on the Norwegian Continental Shelf.”

Norway was a core legacy play for ExxonMobil, but as the company entered a period of portfolio rationalization, its Norwegian assets were put up for sale, Boroujerdi said.

He added: “ExxonMobil’s asset sales program has been slow to get moving, but this will help get the campaign into full swing. The attractive exit price will have been too good an opportunity to pass by.”
Offshore Energy Today Staff

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