Norway’s Government May Sell $11 Billion of Statoil Shares

Norway may sell as much as 16 percent of state-owned oil producer Statoil ASA, a stake currently valued at more than $11 billion, after the Conservative-led opposition won elections.

Conservative Party leader Erna Solberg said during the campaign a government under her leadership could cut its stake in Statoil, which pumps more than 70 percent of Norway’s oil and gas, to 51 percent from 67 percent. The Conservatives and three other opposition parties got 96 seats out of 169 in Parliament in yesterday’s election, defeating Prime Minister Jens Stoltenberg’s Labor-led coalition.

“It’s not unlikely that the government will cut its Statoil stake, though it probably isn’t imminent since these processes take time,” Andre Baustad Benonisen, an analyst at Danske Bank Markets, said. “Potential buyers include everything from individuals to local and global funds.”

“Since the government will probably keep a stake larger than 50 percent, a minority post would not be very interesting for industrial players,” Benonisen said in an e-mail.

The Conservative Party, which emerged as the biggest group within the new majority with 48 seats, has promised to cut taxes and loosen the state’s hold on Scandinavia’s richest economy. While it faces challenging negotiations to form a government its partners from the anti-immigration Progress Party, the Christian Democrats and the Liberal Party all have said they want to cut the state’s interest in businesses.

Pragmatic Attitude

“We have a pragmatic attitude where we say that the government can cut its stake,” Ketil Solvik-Olsen, Progress’s spokesman for financial matters and a potential minister, said in a mobile phone interview today. “The most important thing is to safeguard the values in the state’s possession. If we cut our stake to enable the company to develop itself in a better way, we’d be in favor of that.”

Apart from selling a part of its Statoil stake, the Norwegian government could also decide to dilute its interest in a capital expansion, a merger or an acquisition outside of Norway, Solvik-Olsen said.

The Conservatives would also seek to reduce the government’s ownership of other companies, including mobile operator Telenor ASA and aluminum producer Norsk Hydro ASA, Solberg said last month. Norway owns 54 percent of Telenor and 34.3 percent of Hydro.

Price Question

It is “highly likely” that a sale of government shares in Statoil would be realized at “a small discount compared to the share’s price over a given period before the sale,” said Danske’s Benonisen, who recommends his clients buy Statoil shares. “It will not be a problem to sell a big post. It’s more a question of at what price.”

Danske estimates Statoil will rise 13 percent to 151 kroner over the next year. The stock dropped 1.6 percent to close at 132.9 kroner in Oslo today, and has fallen 4.4 percent this year.

A government stake lowered to 51 percent would probably not produce significant changes in the way Statoil is run, said Sverre Christensen, an associate at Oslo’s BI business school.

“In the short term, it means little, partly because the government has been passive” in its ownership in the past, though it would make it more difficult for the government to intervene in the company’s affairs, Christensen said.

Statoil, which got almost two thirds of its production from Norway in the second quarter, aims to boost its production to 2.5 million barrels a day of oil equivalent in 2020 from around 2 million today. Most of that growth is set to come from Statoil’s international operations and especially from shale oil and gas assets in the US.

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