BASF Pays $1.35 Billion to Statoil to Expand Oil Production

BASF SE (BAS)’s oil-production unit agreed to pay $1.35 billion to Statoil ASA (STL) and contribute part of a license in return for stakes in oil and gas sites owned by the Norwegian company that will help it boost North Sea output more than tenfold.

BASF will get minority stakes in three oil fields, taking over the Brage platform, Wintershall said today in a statement. Statoil will also receive a 15 percent share in the Edvard Grieg license and Norway’s largest oil and gas company said the deal “realizes significant value” for investors.

For BASF, the acquisition gives its Wintershall arm the means to boost production from Norway’s continental shelf without the risk and expense incurred with developing prospects from scratch. Wintershall’s daily production from Norway will increase to almost 40,000 barrels of oil equivalent from 3,000. It will become among the top producers in the area, with a more balanced global portfolio, BASF Chief Executive Officer Kurt Bock said in the statement.

“It looks like a good price for Statoil, while for Wintershall it means avoiding capital expenditure,” Jason Gammel, an analyst at Macquarie, said by telephone. “It can take some production without the spending risk.”

The two companies agreed to collaborate on researching unconventional deposits, and Statoil will receive a 49 percent stake in Wintershall’s concessions in the Rhineland and Ruhr regions of Germany.

Wintershall Shift

The two companies see potential for even broader cooperation and will share technology, Wintershall Chief Executive Officer Rainer Seele said today at a joint press conference with his counterpart Helge Lund in Stavanger, where Statoil is based. The Norwegian company has “unique experience” with shale gas that Wintershall can benefit from, Seele said.

“We started as an exploration company,” Seele said today at the conference. “We are now in the mode to change the nature of the company from an explorer to a producer and this is why this step is so important for us at Wintershall.”

Wintershall, which is one of the largest license holders in Norway, boosted exploration activities in 2008 with the acquisition of Revus Energy.

Bonus Payment

Statoil will hand over its 32.7 percent stake in the Brage oil field and reduce its holdings in the Gjoea and Vega fields, Ludwigshafen, Germany-based BASF and Stavanger-based Statoil said in the joint statement. Production from Statoil’s divested areas was 39,000 barrels of oil equivalent a day in the first half of 2012.

An additional payment of as much as $100 million will be made on successful development of the Vega field, BASF said.

The transaction demonstrates the value of Statoil’s portfolio and further enhances financial flexibility, Statoil CEO Helge Lund said in the statement. “We continue our effort to optimize our portfolio, invest in core areas and utilize our key competencies to support our growth strategy.”

Statoil is seeking to grow its production to at least 2.5 million barrels of oil equivalent a day in 2020 from about 2 million barrels today, and is expanding abroad to counter falling output from aging fields off the coast of Norway.

To contact the reporter on this story: Sheenagh Matthews in Frankfurt at smatthews6@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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