BP and Det norske oljeselskap have formed Aker BP ASA, an independent oil and gas company combining the assets and expertise from both companies’ Norwegian exploration and production operations to form the largest Norwegian independent oil and gas producer.
Under the terms of the proposed transaction, the BP Norge and Det norske businesses will combine and be renamed Aker BP ASA. Aker BP will be independently operated and listed on the Oslo Stock Exchange. Aker BP will be jointly owned by current Det norske shareholder Aker (40%), other Det norske shareholders (30%) and BP (30%). BP will also receive a cash payment of $140 million plus positive working capital adjustments as part of the transaction.
“The transaction yields attractive acquisition metrics for BP and is a unique way to capture offshore cost deflation while giving BP long-cycle growth potential,” said Cowen and Company analysts in a note Friday morning.
In the deal, BP sold ~63kboed (68% liquid, FY15) production and 225 MMboe reserves to Det norske.
For BP, the 30% stake it acquires in the new company holds a total value of $1.3 billion at today's Det norkse share price and including Det norske's 135.1 million share equity issuance, the analysts said, noting that accounting for Det norske's $2.6 billion net debt, the deal values BP's production at $33k/boe and reserve base at $9.2/bbl.
“BP gains two attractive NCS partners that will allow it to participate in production growth through the end of the decade, including an interest in world-class Johan Sverdrup development. The newly formed Aker BP As has 122kboed production (78% liquids, FY15) and potential to grow organically to 250kboed by 2023. The newly formed company will have 723 MMboe reserves and 500 MMboe additional resource potential,” the analysts continued.
The completion of the transaction, which is expected by the end of 2016, is subject to customary closing conditions, regulatory review and approval by Det norske shareholders. According to BP, all of BP Norge’s roughly 850 employees will transfer to the combined organization upon completion of the deal.