Total SA (FP), Europe’s third-largest oil producer, plans to sell a stake in Norway’s Gina Krog field development as it scales back spending, RS Platou Markets said.
Total is seeking to offload less than half its 38 percent holding in the oil and gas deposit, Preben Grevstad, a senior partner at the bank, said in an interview. The project’s present value was estimated at 12.7 billion kroner ($2.1 billion) in a development plan approved by authorities last year.
“It’s known in the market that part of their share in Gina Krog has been for sale,” said Grevstad, who’s in charge of oil and gas at Oslo-based Platou’s corporate-finance unit. Leif-Harald Halvorsen, a spokesman for Total in Stavanger, Norway, declined to comment.
Total, which followed larger European producers Royal Dutch Shell Plc (RDSA) and BP Plc (BP/) in reporting lower fourth-quarter profit, is reducing investments as costs rise, refining margins shrink and oil prices stagnate. The Courbevoie, France-based company has targeted $15 billion to $20 billion in asset sales from 2012 to 2014 as it focuses on bigger projects to raise production.
Gina Krog, operated by Statoil ASA (STL) with a 58.7 percent stake, holds reserves of 107 barrels of oil and condensate, 3.3 million metric tons of natural gas liquids and 12.5 billion cubic meters of gas. The partners forecast investments of 29.1 billion kroner and operating costs averaging 1 billion kroner a year over its 16 years of output, due to start in early 2017.
Total isn’t the only company seeking to cut its holding in the North Sea project. Det Norske Oljeselskap ASA also plans to sell its 3.3 percent share, Grevstad said. Det Norske, which has said it’s considering new share offerings and debt as well as divestments, declined to comment on specific assets.
Oil companies are under pressure from investors to curb capital spending and concentrate on generating higher returns for shareholders as costs climb. Statoil, Norway’s largest energy company, has sold North Sea assets, while Talisman Energy Inc. and Marathon Oil Corp. have said they will leave the Nordic country and RWE AG is looking to sell its Dea oil and gas unit.
“It’s a buyer’s market on several North Sea field developments as a lot of companies are struggling with cash flow and have capital-expenditure challenges,” Platou’s Grevstad said March 7.
While Platou isn’t advising on any talks over Gina Krog, it’s seeking to assist potential buyers of assets to be sold by companies including Marathon and Talisman, Grevstad said.
Total plans to reduce investments to $26 billion in 2014 after spending peaked at $28 billion last year. The company said last month it will keep selling assets to fund large projects as it targets a production increase of more than 30 percent to 3 million barrels of oil equivalent a day in 2017.
Offshore-asset sales in Norway, western Europe’s biggest oil and gas producer, may reach a record this year, exceeding 2012’s $19 billion kroner, Edinburgh-based consultants Wood Mackenzie Ltd. said in January.
To contact the reporter on this story: Mikael Holter in Oslo at firstname.lastname@example.org