BP sells off Norwegian oil fields

Deal reflects how biggest oil companies are restructuring to meet falling prices

The new  Aker BP will be the seventh-largest producer in Norway, with daily oil and natural gas output of about 122,000 barrels. Photograph: iStock

The new Aker BP will be the seventh-largest producer in Norway, with daily oil and natural gas output of about 122,000 barrels. Photograph: iStock

 

BP sold its Norwegian oil fields, some more than 40 years old, to a company controlled by billionaire Kjell Inge Roekke in a 10.8 billion kroner (€1.2 billion) stock deal.

The new business, called Aker BP, will be the seventh-largest producer in Norway, with daily oil and natural gas output of about 122,000 barrels of oil equivalent, according to statements from the companies on Friday.

Aker, the Norwegian billionaire’s holding company, will have 40 per cent of the venture and BP will retain 30 per cent.

The deal, which came after BP considered selling the whole of its Norwegian business, shows how the world’s largest oil companies are using new structures to adapt to lower oil prices.

Major producers are seeking to sharpen their portfolios, cut spending and reduce debt by offloading decades-old fields, but the biggest industry downturn in a decade means there are fewer buyers.

“This is a great example of how we need to continue to adapt in this new world and not be stuck in our traditional ways of doing business,” Bernard Looney, BP’s chief executive officer for upstream, said on a conference call.

“The direct impact on BP will be less cost in the immediate term, less capital, reduced headcount and over time a growing production profile compared with what we have with our own assets.”

Shares Surge

About half the new company’s production will come from BP and the rest from Roekke’s oil company Det Norske Oljeselskap.

The 30 per cent of the venture not owned by Aker or BP will be held by Det Norske’s other shareholders.

Det Norske will issue 135.1 million shares at 80 kroner apiece for all of BP’s stocks, a tax loss carry forward and a net cash position, according to the statement.

Aker will buy 33.8 million of these shares from BP at the same price to achieve the agreed on ownership structure.

Det Norske shares surged as much as 16 per cent, the biggest gain in four years to a record high, and were up 7.1 per cent at 90.85 kroner as of 10.42am in Oslo.

Aker gained 6 per cent while BP dropped 0.8 per cent.

- Bloomberg