Det norske oljeselskap ASA (Det norske) has entered into an agreement with BP p.l.c. (BP) to merge with BP Norge AS (BP Norge) through a share purchase transaction, to create an independent offshore E&P company. The transaction will significantly strengthen the combined company’s operations, cost efficiency and growth potential, enabling the company to initiate dividend payment. The company will be named Aker BP ASA (Aker BP) and will be headquartered at Fornebuporten, Norway, with Aker ASA (Aker) and BP as main industrial shareholders.

BP group chief executive Bob Dudley comments, “BP and Aker have matured a close collaboration through decades, and we are pleased to take advantage of the industrial expertise of both companies to create a large independent E&P company. The Norwegian Continental Shelf represents a significant opportunity going forward and we are looking forward to working together with Aker to unlock the long term value of the company through growth and efficient operations. This innovative deal demonstrates how we can adapt our business model with strong and talented partners to remain competitive and grow where we see long-term benefit for our shareholders.”

Under the terms of the proposed transaction, the BP Norge and Det norske businesses will combine and be renamed Aker BP ASA. Aker BP will be independently operated and listed on the Oslo Stock Exchange. Aker BP will be jointly owned by current Det norske shareholder Aker (40%), other Det norske shareholders (30%) and BP (30%). BP will also receive a cash payment of USD 140 million plus positive working capital adjustments as part of the transaction.

Øyvind Eriksen, chairman of the board of directors in Det norske comments, “Aker BP will leverage on Det norske’s efficient operations, BP’s international capabilities and Aker’s 175 years of industrial experience. Together, we are establishing a strong platform for creating value for our shareholders through our unique industrial capabilities, a world-class asset base, and financial robustness.”

Aker BP will hold a portfolio of 97 licenses on the Norwegian Continental Shelf, of which 46 are operated. The combined company will hold an estimated 723 million barrels of oil equivalent P50 reserves, with a 2015 joint production of approximately 122,000 barrels of oil equivalent per day. Det norske and BP had at the end of 2015 a combined workforce of approximately 1,400 employees.

The completion of the transaction, which is expected by the end of 2016, is subject to customary closing conditions, regulatory review and approval by Det norske shareholders. All of BP Norge’s roughly 850 employees will transfer to the combined organisation upon completion of the deal.

In addition to the attractive combination of the two companies’ Norwegian asset portfolios, Aker BP will benefit from the combined strength of Det norske’s efficient, streamlined operating model and BP’s long experience in Norwegian offshore operations, asset knowledge, technical skills and international experience. The companies believe this new Norwegian super-independent could organically grow production to more than 250,000 barrels of oil equivalent per day by the early 2020s.

Tags: BP Norge AS, Det norske oljeselskap ASA