Norwegian Energy Company ASA (Noreco) has entered an agreement to sell its interests in the South Arne oil field in Denmark to Hess (NYSE:HES) for a consideration of US $200 million. Noreco expects to record a profit of approximately US $50 million after tax from the transaction.
"An important part of Noreco's strategy is to renew and strengthen the production base,” said Noreco’s CEO Einar Gjelsvik. “We are currently in the midst of a substantial investment program which will bring on 8-9,000 barrels per day of new production next year. Portfolio changes are a natural part of this program”
Over the last few months, Noreco has entered agreements to sell assets for more than NOK 1.5 billion (US $272 million), and correspondingly also reduced the future investment commitments by a significant amount.
The valuation date of the transaction is 1 January 2011. The transaction is subject to customary approval by Danish authorities.
South Arne is an oil field located in Danish North Sea, operated by Hess Denmark ApS. Production from the field commenced in 1999.
The field is currently being expanded with the South Arne Phase III development, which comprises two new wellhead platforms and 11 new wells.
Noreco owns 6.56 percent of the field.
At the beginning of 2011, South Arne represented 8.8 million barrels oil equivalents of proved and probable oil and gas reserves for Noreco. During the first half of 2011, Noreco's share of production from South Arne averaged 1,580 boe per day.
Noreco divests stake South Arne oil field to Hess for $200MM