Det Norske Oljeselskap ASA should buy assets to boost output and will have to issue shares to develop the biggest Norwegian oil find in decades, according to its biggest owner, billionaire Kjell Inge Roekke’s Aker ASA.
Det Norske’s objective is to have a financing strategy for developing the Johan Sverdrup field in place by the end of this year, according to Aker, which owns half of the oil explorer.
“All alternatives are being explored,” including asset sales, the acquisition of more producing assets to optimize its tax position, new debt and selling shares, Chief Executive Officer Oeyvind Eriksen said in Aker’s first-quarter report today. “An equity issue will be inevitable sooner or later and in Aker’s opinion, it should be open to all shareholders.”
Det Norske has a stake in two of three North Sea licenses holding the Sverdrup field, which could be the biggest oil discovery off Norway since Statfjord in 1974, holding as much as 2.9 billion barrels of oil equivalent. The field’s owners, which include Statoil ASA and Lundin Petroleum AB, said in February that the first phase of the field’s development will cost as much as 120 billion kroner ($20.2 billion).
Det Norske is also investing in the Ivar Aasen field, due to start production in 2016, three years before Sverdrup. The company will need to strengthen its equity position by the end of the year to avoid breaching a debt covenant, Swedbank First Securities analyst Teodor Sveen Nilsen said in a note on April 30. A share issue may come earlier to raise funds for both Aasen and Sverdrup, he said.
An equity issue won’t necessarily be completed by the end of this year, Eriksen said in a separate interview. He declined to comment on the scope of the share sale or the funding plan as a whole. While Aker would like to subscribe to a proportion of the new shares equal to its current stake in Det Norske, it could buy more if other shareholders decide not to participate.
“Our focus is that there should be absolute equal treatment of all shareholders,” he said.
(An earlier version of this story was corrected to change date of Aasen start.)