Norway Oil Producers Seek More Deals After $2 Billion Flurryby
Det Norske scouting market after two recent acquisitions
Buyers, sellers coming closer 1 1/2 years into downturn
More than a year after oil prices started their biggest descent since the financial crisis, sellers and buyers of oil and gas assets in Norway are finally starting to see eye to eye.
After a flurry of deals totaling $2 billion over the past month, including billionaire Mikhail Fridman’s acquisition of EON SE’s Norwegian oil unit, producers such as Det Norske Oljeselskap ASA, Centrica Plc, OMV AG and Wintershall AG are all looking to make deals as others seek to offload assets to survive crude’s collapse.
“Bid and ask have come closer,” Karl Johnny Hersvik, chief executive officer of Det Norske, said in an interview at a conference in Stavanger on Wednesday. His company, controlled by billionaire Kjell Inge Roekke, is looking to possibly make more acquisitions after spending almost $200 million buying the Norwegian units of Svenska Petroleum Exploration AB and Premier Oil Plc since last month.
The plunge in oil prices to about $45 a barrel for Brent from a high of $115 in less than 1 1/2 years pressed down company valuations and fueled demand from buyers. So far that has resulted in one mega-deal in Royal Dutch Shell Plc’s purchase of BG Group Plc. Fading income has also put pressure on producers keen to shield dividends, with all the biggest companies reducing spending and some selling off assets to raise cash and jettison investment commitments.
Total SA, the French oil company pursuing a $10 billion asset-sale program, offloaded a 15 percent share in Norway’s Gina Krog project to a unit of Sequa Petroleum NV for 1.4 billion kroner ($161 million) last month.
“There will be more globally, that’s for certain,” said Martin Borthne, Total’s director for operations and projects in Norway, in an interview. He declined to give any geographical details.
Wintershall, a unit of BASF SE which has bought assets from Statoil ASA in Norway for more than $2.6 billion since 2012 and also sold $602 million in assets to Sequa in June, is keeping an eye on the market for more acquisitions, according to Alv Bjoern Solheim, its deputy managing director in Norway.
“There’s more for sale than usual,” he said. “But this is a continuous process, and we’re looking at opportunities now just as we looked at opportunities before.”
Vienna-based OMV is also considering “mid-sized or bigger acquisitions in the future” if they fit its Norwegian portfolio, General Manager Bernhard Krainer said at the Norwegian Operators Conference on Thursday.
Centrica, the biggest energy supplier to U.K. homes, is seeking to buy assets in Norway within a year or two to counter declining production and keep up output of 40 million to 50 million barrels of oil equivalent a year, said Senior Vice President Dag Omre in a presentation Wednesday.
“We foresee that Centrica will make major acquisitions on the Norwegian continental shelf” where “substantial assets” are for sale as opposed to just two or three years ago, he said. “But we’re not running to the market right now.”