Okea's IPO Falls Short

June 17, 2019

Gjoea platform (File photo: Equinor)
Gjoea platform (File photo: Equinor)

Norwegian oil firm Okea has raised 315 million crowns ($36 million) in an initial public offering, the company said on Monday, less than half of what it had initially planned due to a fall in the oil price.

Europe's oil and gas sector has built up a crowded pipeline for stock market flotations but investors are cautious given a bumpy recovery following the 2014 downturn and uncertainty over long-term oil demand as the world transitions to cleaner energy.

Okea had to extend its bookbuilding period for a week and lower its IPO price to 21 crowns per share, putting its market capitalization at 2.1 billion crowns, from an initial price range of 25-33 crowns per share.

It has also issued fewer new shares as its main shareholders, Thailand's Bangchak Corporation and private equity firm Seacrest Capital, have decided to keep all of their stakes.

"When we launched the (IPO) campaign, the oil price fell by 15% in a week. The market conditions were really terrible, and that's why we we've decided to scale down the offering," Okea's co-founder and Chief Executive Erik Haugane told Reuters.

The company announced initial IPO terms on May 24, announcing plans to raise gross proceeds of 650 million crowns to 858 million crowns to support its growth plans.

Okea, which co-founders include former Norwegian oil and energy minister Ola Borten Moe, acquired Shell's stakes in Norway's Draugen and Gjoea fields for 4.5 billion crowns last year.

It also holds a stake in Repsol's Yme field, expected to start production next year.

"We are fully financed for ongoing projects... The IPO's main purpose was to enable us to take part in new deals," Haugane said, without elaborating.

Haugane said the oil industry could cope with oil prices between $60 and $70 a barrel, but if they dropped below $60, many projects could be halted.

Okea's shares will start trading on Oslo's main exchange on Tuesday, with public investors expected to hold about 30% of its shares.


($1 = 8.7197 Norwegian crowns)

(Reporting by Nerijus Adomaitis, editing by Emelia Sithole-Matarise)



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