Det norske Merges With BP's Norwegian Subsidiary

Johan
File image courtesy Det norske

By MarEx 2016-06-10 19:22:53

Det norske oljeselskap and BP announced Friday that they will be creating a new company bearing the Aker name – Aker BP – to combine both firms’ oil and gas assets and operations in Norway. The new firm will be the largest independent O&G producer in the nation, potentially in control of roughly one tenth of its output. 

State-owned Statoil is still much larger, with roughly two thirds of Norway's upstream production, and some in Norwegian industry and government have called for more robust domestic competition in the sector. 

Aker BP will list on the Oslo exchange, and ownership will be split 40/30/30 between Aker, BP and other shareholders; BP also gets $140 million in cash. The deal is still subject to regulatory review and shareholder approval, but it is expected to close by the end of the year. 

Det norske operates the Alvheim, Volund, Vilje, Jette and Ivar Aasen developments, and it is a minority partner in the giant Johan Sverdrup field (following a court dispute last year over ownership). The firm's largest shareholder is Aker, a specialist in offshore services and offshore maintenance, which holds 49.99 percent. Det norske has been acquiring smaller Norwegian operations recently, including Marathon Oil's Norwegian interests, Noreco Norway, Svenska Petroleum Norway and Premier Oil's Norway unit.

BP's BP Norge subsidiary operates the Skarv, Valhall, Hod, Ula and Tambar fields. Together, Det norske and BP Norge employ a total of 1400 personnel; they did not immediately discuss consolidation or headcount reduction measures, but analysts said that it would give both an opportunity to control costs.

"There is a need in the industry for closer collaboration, for pooling of rigs, for harmonizing standards, all to get the costs down," said Martijn Rats, head of European oil and gas equity research at Morgan Stanley. "For BP, this transaction is important but at the scale of the company, it is quite modest." The merged entity will contain all of Det norske's assets, but only a small percentage of BP as a whole.