Det Norske Declines as Tax Plan Hits Project Profits: Oslo Mover

Det Norske Oljeselskap ASA, an oil and gas producer with a stake in Norway’s biggest discovery in almost 40 years, declined in Oslo trading after the government unexpectedly raised taxes on the industry.

The Trondheim, Norway-based company fell as much as 2.7 percent, the most in three weeks, and traded 1.9 percent lower as of 11:45 a.m., making Detnor the biggest loser today on the Oslo stock exchange’s OBX index of 25 most-traded stocks.

The government yesterday said it will limit the tax-deductible component of petroleum income so that a so-called uplift on cash flow is cut to 22 percent from 30 percent. Norway will also increase its special petroleum tax to 51 percent from 50 percent, keeping a top rate of 78 percent. The increase will raise total oil industry taxes by about 3 billion kroner ($520 million) a year, it said.

The proposals, which will be included in a revised budget due to be unveiled tomorrow, are intended to ease cost pressure and reduce overheating in western Europe’s biggest oil producer.

Norway is starting to feel the pain from Europe’s debt crisis and from the strengthening krone even as it struggles to absorb wealth from its offshore oil and gas production. This has split the economy, causing job cuts in traditional industries such as forestry production as record investment offshore pushes wages and costs up nationwide.

“We see Det Norske as the most exposed company within our coverage universe, with an effect of up to 3 kroner per share,” Fondsfinans ASA analyst Morten Evjenth Lindbaeck said in an e-mailed note to clients.

‘Lower Valuation’

Bridge Energy ASA and Norwegian Energy Co. “will only see minor effects of the proposal,” he said.

The biggest impact from the tax change will be on Detnor, possibly reducing its net asset value by more than 2 kroner a share, Alex Gheorghe, an analyst at RS Platou Markets AS, said in an e-mail. Projects including Johan Sverdrup, which may be Norway’s biggest oil discovery since Statfjord in 1974 with as much as 3.6 billion barrels, will be affected, Gheorghe said.

Garantiana, a development by companies including Detnor, Total SA and Bridge Energy ASA, would be affected, while Norvarg, a project involving Detnor, Bridge Energy and North Energy ASA, “would also have a slightly lower valuation,” Gheorghe said.

Bridge fell 0.5 percent to 10.95 kroner, while North dropped as much as 2.8 percent before trading down 0.8 percent at 5 kroner as of 11:45 a.m. Noreco declined 0.9 percent to 3.43 kroner.