Vår Energi AS, owned by ENI and HitecVision, on 26 September signed an agreement with ExxonMobil to acquire its upstream assets in Norway. The transaction includes ownership interests in more than 20 producing fields operated mostly by Equinor, including Grane, Snorre, Ormen Lange, Statfjord and Fram, with a combined production of approximately 150,000 barrels of oil equivalent per day (boepd) in 2019.
ENI CEO Claudio Descalzi 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 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.” He said. “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,” Descalzi added.
A senior partner at HitecVision, Tor Espedal, hailed the agreement. “We are proud to continue building a great Norwegian oil and gas company. From the time we created Point Resources by combining our niche companies Core, Spike and Pure in 2016, through the acquisition of ExxonMobil’s operated assets in 2017 followed by the merger with ENI Norge to create Vår Energi in 2018, it has been a fantastic journey,” he said. “With the current transaction our partnership model with Eni, which builds on the two parties’ respective strengths, continues to prove its worth. We look forward to continuing to work with Vår Energi int the future,” he added.
Vår Energi CEO Kristin Kragseth hailed this transaction as “a major milestone in the short history of Vår Energi and a proof of our commitment to further develop the NCS. In delivering on our ambitious growth plans, Vår Energi will not only be a major force on the shelf, we are also creating major opportunities for Norwegian suppliers in the years to come, securing employment in many parts of the country. It also gives me great pleasure to welcome our previous colleagues in ExxonMobil into Vår Energi. Our priority will be to continue to operate in a safe and environmentally responsible manner.”
According to ENI, the agreed terms include a cash consideration of $4.5 billion subject to closing adjustments. The acquisition has an effective date of 1 January and is expected to be completed in the fourth quarter subject to standard conditions precedent, including customary approvals from regulatory authorities.
Vår Energi will become the second largest E&P company on the NCS after Equinor, with total reserves and resources of about 1,900 million barrels of oil equivelent. Total production is expected to be about 300,000 barrels of oil equivalent per day in 2019, growing organically to more than 350,000 barrels of oil equivalent per day in 2023 as the company invests about $7 billion in development projects such as Johan Castberg, Balder X and Grand in the 2020-23 period.
The ExxonMobil portfolio is a strategic fit for Vår Energi and will add interests in more than 20 producing fields in the North Sea and Norwegian Sea allowing the extraction of commercial and logistical synergies.
The acquisition marks an important milestone both for Vår Energi and the company’s shareholders Eni and HitecVision, delivering on the growth ambitions set out when merging Point Resources and Eni Norge to create Vår Energi in 2018.
The majority of the about 50 employees working on the acquired assets will join Vår Energi and take part in the further growth and development of the company in the years to come. With this acquisition, Vår Energi continues to expand its material and diversified portfolio of oil and gas producing assets, development projects and attractive exploration licenses. Vår Energi is already the largest oil producer in the Barents Sea, and will be strengthening that position through its participation in the Johan Castberg development, ENI said. Other planned development projects in the combined portfolio include Balder X, the Snorre Expansion Project, Grand and Fenja, providing an organic platform for further growth in the North Sea and Norwegian Sea. The financial strength from the producing assets provides a basis for further investments in development projects and exploration, as well as future M&A opportunities.
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.