Sval Energi closes $300mn Norwegian purchase

Sval Energi, backed by private equity investor HitecVision, has closed a deal to buy Italian firm Edison's Norwegian upstream business for $300mn, including debt, it said on March 25.

The transaction has been backdated to January 1, 2020. Through the deal, Sval has secured 25mn barrels of oil equivalent in net reserves.

Sval has raised its stake in the Wintershall Dea-operated Nova oilfield, due to start production next year, from 10% to 25%. It will also gain a 10% share in the Dvalin field, also run by Wintershall Dea, as well as interests in five exploration licences. Dvalin was meant to be online already, but its launch was delayed in January after its gas was found to contain too high levels of mercury.

"We’re excited to mark this milestone in our pursuit to build a modern energy company in Norway; nimble, forward leaning and active across several value chains," Sval CEO Nikolai Lyngo said. "The acquisition of Edison Norge strengthens our position on the Norwegian Continental Shelf and will help us scale our activity and build a strong portfolio."

Edison, whose owner is French energy giant EDF, late last year sold off its other upstream assets to Mediterranean-focused Energean for $284mn. That deal initially covered the company's Norwegian business as well, but those operations were excluded after Energean's attempt to sell them on to North Sea-focused Neptune Energy failed.

Norway's HitecVision is also expanding in the UK North Sea. Another of its businesses NEO Energy agreed to pay $1bn last month to buy a package of ExxonMobil assets in UK waters. NEO is also set to acquire UK player Zennor Petroleum from equity fund manager Kerogen Capital for up to $625mn.

North Sea M&A activity is heating up, thanks to a recent rebound in oil and gas prices and the post-Covid economic recovery. Earlier this week, Poland's PGNiG also clinched a deal to buy the Norwegian gas portfolio of UK group Ineos for $615mn.

Commenting on the PGNiG deal, Wood Mackenzie analyst Neivan Boroujerdi said North Sea M&A had seen a "blockbuster start to the year," with deals having been agreed worth $3.5bn in less than three months, versus a total of $4bn during the whole of last year.

"It cements the region's hot streak. But this has been largely a UK story so far," Boroujerdi said. "Comparatively speaking, Norwegian M&A has been slow to get moving. Deal flow has stagnated in recent times with spend in 2020 reaching a 15-year low. But this transaction could mark the start of a recovery as companies look to position themselves to take full advantage of the temporary tax terms."

Norway last summer agreed to provide some $10.6bn in tax relief to new oil and gas projects, provided that their development plans are filed before the end of 2022.