BP and Det norske oljeselskap have combined their Norwegian businesses to create Aker BP – a move that is expected to organically grow production to more than 250,000 boe/d by the early 2020s.
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Image from BP. |
The proposed deal, at a reported US$1.3 billion, will see the BP Norge and Det norske businesses combine and be renamed Aker BP ASA that will be independently operated and listed on the Oslo Stock Exchange.
Aker BP will be jointly owned by current Det norske shareholder Aker (40%), other Det norske shareholders (30%) and BP (30%). BP will also receive a cash payment of $140 million plus positive working capital adjustments as part of the transaction.
"Aker BP will leverage on Det norske's efficient operations, BP's international capabilities and Aker's 175 years of industrial experience,” said Øyvind Eriksen, chairman of the board of directors in Det norske said. “Together, we are establishing a strong platform for creating value for our shareholders through our unique industrial capabilities, a world-class asset base, and financial robustness."
BP's Group Chief Executive Bob Dudley highlighted the supermajor's close collaboration with Aker. "We are pleased to take advantage of the industrial expertise of both companies to create a large independent E&P company,” said BP group chief executive Bob Dudley. “The Norwegian Continental Shelf represents a significant opportunity going forward and we are looking forward to working together with Aker to unlock the long term value of the company through growth and efficient operations.
"This innovative deal demonstrates how we can adapt our business model with strong and talented partners to remain competitive and grow where we see long-term benefit for our shareholders."
The agreement, which is expected to create a strategic platform for long-term growth in Norway, is set for completion by the end of the year, subject to customary closing conditions, regulatory review and approval by Det norske shareholders. All of BP Norge's roughly 850 employees will transfer to the combined organization upon completion of the deal.
According to the two two companies, Aker BP will benefit from the combined strength of Det norske's efficient, streamlined operating model and BP's long experience in Norwegian offshore operations, asset knowledge, technical skills and international experience.
Analysts Simmons & Co. believe that the transaction is positive for BP. "[This gives] them additional cash in the short term and access to key growth assets (including Johan Sverdrup) over the long term," said Guy Baber in Simmons & Co.'s morning note.
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