Swap deal to boost Statoil’s stake in Lundin

Statoil ASA has agreed to divest its entire 15% interest in Edvard Grieg field on PL338 offshore Norway to Lundin Petroleum AB in exchange for an increased shareholding in Lundin.

Expected to close by the end of July, the deal also includes divestment of 9% interest in the Edvard Grieg oil pipeline and 6% interest in the Utsira High gas pipeline (OGJ Online, Nov. 6, 2015), and a $68-million cash payment to Lundin, which in turn will issue 27.6 million shares to Statoil.

Lundin also will transfer 2 million treasury shares and issue an additional 1.74 million shares to Statoil in exchange for a cash consideration based on the market value of the shares.

Following completion of the deal, Statoil will own 68.4 million shares, or 20.1% of all shares, of Lundin. The swap, initiated by Lundin, is effective Jan. 1.

The two firms will continue to operate independently and act as separate entities in all licenses on the Norwegian Continental Shelf. Statoil says the deal strengthens its indirect exposure to core field development projects and growth assets on the NCS, including its operated Johan Sverdrup field.

As a consequence of the deal, Statoil will equity account its stake in Lundin, resulting in an increase in Statoil's reserves and production. Statoil has no plan to further increase its shareholding in Lundin.

From its perspective, Lundin says the deal secures access to additional high-quality reserves, production, and cash flow in the Utsira High core area.

Edvard Grieg field was discovered by Lundin Norway in 2007 and started production late last year (OGJ Online, Nov. 30, 2015). Lundin says it’s confident that the strong start-up performance of the field from both a facilities and subsurface perspective will continue in the years ahead.

If the deal closes by June 30, Lundin’s second-half production will increase 10,000 boe/d, resulting in an increased full-year production guidance of 65,000-75,000 boe/d from 60,000-70,000 boe/d. Full-year development capex guidance will increase $35 million to $970 million. Proved plus probable net reserves to Lundin will increase 30.9 million boe as of Jan. 1 to 716.2 million boe.