Equinor, Faroe plan asset swap; DNO responds

Equinor and Faroe Petroleum PLC have agreed to asset swaps in the Norwegian Sea and the North Sea region of the Norwegian Continental Shelf. The transactions are calibrated as a balanced swap with no cash consideration. Faroe signed a binding agreement to swap its interests in the Njord, Hyme redevelopment, and Bauge development assets in return for interests in four production assets on the NCS: Alve, Marulk, Ringhorne East, and Vilje.

Equinor and Faroe Petroleum PLC have agreed to asset swaps in the Norwegian Sea and the North Sea region of the Norwegian Continental Shelf. The transactions are calibrated as a balanced swap with no cash consideration.

Faroe signed a binding agreement to swap its interests in the Njord, Hyme redevelopment, and Bauge development assets in return for interests in four production assets on the NCS: Alve, Marulk, Ringhorne East, and Vilje.

Faroe said the deal accelerates production growth—adding an anticipated 7,000-8,000 boe/d net to the company during 2019 with the potential for further upside through reservoir outperformance. The company said it is swapping development for producing reserves, adding two new core areas, and increasing its financial liquidity with an expected increase in cash flow, a substantial reduction in capital expenditure associated with the Njord Area, and lower unit operating costs.

For Equinor, the net effect is to upgrade its portfolio “in line with our updated roadmap for the NCS,” said Siri Espedal Kindem, senior vice-president for operations north. “We are strengthening our operated position in the prolific Njord area. We remain operator and majority equity holder in Alve, which is produced via Norne, another important part of the Norwegian Sea for us,” Kindem said. The swap also would reduce Equinor’s exposure to noncore and partner-operated assets.

DNO responds

Faroe is currently the target of an unsolicited takeover by DNO ASA (OGJ Online, Nov. 26, 2018). The Oslo-based company, which made a November offer for all shares of Faroe that is does not own, commented on the proposed swap.

“This is a significant deal for Faroe, and we need to understand it before making a judgement. While Faroe has asserted this is not designed to stop the DNO offer, we need to ask if this is good value for a company seeking growth: to swap out of its high-quality, large-scale, core growth hub, Njord, operated by…Equinor, and to take on instead mature and declining production assets—in a deal with Equinor itself. That is the test this deal needs to satisfy,” DNO said in a statement.

With effective dates of Jan. 1, 2019, closing of the asset swaps is subject to government approval.

More in Companies