Billionaire Kjell Inge Roekke is open to allowing Det Norske Oljeselskap ASA to reduce its stake in Norway’s biggest oil find in decades as the crude explorer needs cash to fund development costs.
Roekke’s Aker ASA, which owns 50 percent of Det Norske, is pushing the company to sell assets and acquire producing fields to raise cash as it faces investment needs that by far exceed its 9 billion-krone ($1.5 billion) market value. That may involve lowering Det Norske’s share in the Johan Sverdrup field, according to Aker Chief Executive Officer Oeyvind Eriksen.
“We have no holy cows in Det Norske,” Eriksen said in an interview in Oslo yesterday. “Aker has put no limitations on Det Norske’s freedom when it comes to portfolio optimization. But Aker is of course well aware of the fact that Johan Sverdrup is a very valuable asset.”
The discovery of Sverdrup in two parts by Lundin Petroleum AB and Statoil ASA in 2010 and 2011 renewed explorers’ interest in Norway after a decade of falling oil production. The field, which holds 1.8 billion to 2.9 billion barrels of oil equivalent, also transformed Det Norske, which has a stake in two of the field’s three licenses.
The shares surged fourfold as the extent of the find became known. The stock is down 40 percent since a 2012 record, partly on investor concerns over how the company intends to finance the development of Sverdrup. The first phase alone will cost as much as 120 billion kroner.
Det Norske fell as much as 6 percent in Oslo trading, the most in almost three months, and traded 4.2 percent lower at 60.35 kroner as of 4:20 p.m. in Oslo. Aker traded 2.3 percent lower at 209.5 kroner at the same time.
The company has sold new shares twice since Sverdrup was found and a third issue is “inevitable sooner or later” as a part of a funding plan that should be ready by the end of 2014, Aker said yesterday. The plan may also involve new debt and changes in the company’s asset portfolio, Aker said.
Det Norske has said it could sell part of its 35 percent stake in Ivar Aasen, a North Sea oil field that will start production in the end of 2016, three years before Sverdrup. It may also cut its 25 percent holding in the Krafla and Askja discoveries and other assets.
Aker had previously said Det Norske shouldn’t reduce its stake in Sverdrup.
Det Norske declined to comment on the funding plan it’s preparing, including asset transactions. “We’re looking at all options,” spokesman Torgeir Anda said in a phone interview. “We aim to have a solution by the end of the year.”
The Norwegian offshore-asset market could beat a 2012 record of $19 billion in transactions, Edinburgh-based consultants Wood Mackenzie Ltd. said in January. After RWE AG sold its Dea oil and gas unit to billionaire Mikhail Fridman’s L1 Energy in March, Norwegian assets for sale include Talisman Energy Inc. and Marathon Oil Corp.’s North Sea fields.
Det Norske’s Sverdrup partner Lundin has said it’s considering a bid for Marathon’s assets in the Alvheim area of the North Sea. Aker’s Eriksen declined to say whether Det Norske is also looking at the assets, though it should “concentrate on activity in the North Sea,” he said.