BP, DNO Form Norwegian E&P Company

UK major BP and Norway's Det norske oljeselskap have formed Aker BP, an independent oil and gas company, each contributing about half of their current production.

They said the deal combined the assets and expertise from both companies' Norwegian exploration and production operations to form the largest Norwegian independent oil and gas producer.

BP CEO Bob Dudley (Photo credit: BP)

With a portfolio of 97 licenses on the Norwegian Continental Shelf, of which 46 are operated, it will have an estimated 723mn barrels of oil equivalent P50 reserves, with a 2015 joint production of about 122,000 barrels of oil equivalent/day. Det norske had a net average production of 60,000 boe/d last year. The companies believe this new Norwegian super-independent could more than double this, exceeding 250,000 boe/d by the early 2020s.

Under the terms of the proposed transaction, the two businesses will combine and be renamed Aker BP, which will be independently operated and listed on the Oslo Stock Exchange. Aker -- the current 49.9%-owner of Det norske - will own 40% of the new company, other Det norske shareholders 30% and BP also 30%. BP will also receive a cash payment of $140mn plus positive working capital adjustments.

Det norske chairman Oyvind Eriksen, who is Aker's President and CEO, said the new company “would be a strong platform for creating value for our shareholders through our unique industrial capabilities, a world-class asset base, and financial robustness."

The completion of the transaction is expected by the end of 2016, 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.

In addition to the attractive combination of the two companies' Norwegian asset portfolios, BP said the new company would 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.

In 2014, Det norske bought Marathon’s Norwegian assets. It is the operator of producing fields Alvheim, Volund, Vilje and Jette and of the large Ivar Aasen development. The company is also a partner in the Johan Sverdrup field, one of the largest on the Norwegian continental shelf.  

 Oyvind Eriksen, Aker's President and CEO and Det norske's chairman (Photo credit: Aker)

BP has been active on the Norwegian continental shelf since 1965 and operates five producing fields: Skarv in the Norwegian Sea and Valhall, Hod, Ula and Tambar in the North Sea. 

BP CEO Bob Dudley said June 10 that the two companies had worked together for decades, and "we are pleased to take advantage of the industrial expertise of both companies to create a large independent E&P company.”

He said the Norwegian Continental Shelf “represents a significant opportunity” and he was “looking forward to working with Aker to unlock the long term value of the company through growth and efficient operations.”

William Powell

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