Aker ASA: Det norske oljeselskap and BP Norge merge to create leading independent E&P company on NCS
Reference is made to Det norske oljeselskap ASA's ("Det norske") stock exchange announcement today regarding the agreement with BP Plc ("BP") to merge with BP Norge AS ("BP Norway") through a share purchase transaction to create the leading independent E&P company on the Norwegian Continental Shelf (NCS). The company will be renamed Aker BP ASA ("Aker BP"), with Aker ASA ("Aker") and BP as main industrial shareholders.
Aker is the main shareholder in Det norske with a 49.99 per cent ownership, held through its wholly-owned subsidiary Aker Capital AS. Aker BP will be jointly owned by Aker (40 per cent), BP (30 per cent) and other Det norske shareholders (30 per cent). As part of the transaction, Det norske will issue 135.1 million shares based on NOK 80 per share to BP as compensation for all shares in BP Norge, including assets, a tax loss carry forward of USD 267 million (nominal after-tax value) and a net cash position of USD 178 million. In parallel, Aker will acquire 33.8 million of these shares from BP at the same share price to achieve the agreed-upon ownership structure.
"We take great pride in the fact that BP has chosen to partner with Aker in transforming Det norske into a leading independent offshore E&P company," said Aker's Chairman Kjell Inge Røkke. "With this transaction, we provide Det norske with operational strength, a robust capital structure and two solid industrial owners, thereby creating a platform for further growth on the NCS and near-term capacity to pay out quarterly dividend."
The transaction will strengthen Det norske's balance sheet and is credit accretive through a 35 per cent reduction in net interest-bearing debt per barrel of oil equivalent of reserves. Aker BP aims to introduce a quarterly dividend policy. The first dividend payment is planned for the fourth quarter of 2016, conditional upon the approval of creditors.
"We have been in close dialogue with Folketrygdfondet, Det norske's second-largest shareholder, which supports the transactions," said Aker's President and Chief Executive Officer, and Det norske's Chairman, Øyvind Eriksen.
The effective date of the transaction is 1 January 2016 and expected closing is in the third quarter 2016, subject to approval by the relevant authorities.
The collaboration between BP and Aker spans several decades, and the two companies have previously explored the opportunity to create a large independent E&P company. Aker established Aker Exploration in 2006, which has grown through subsequent mergers and acquisitions, including Det norske and Marathon Oil Norway.
"Years of close collaboration between BP and Aker have now resulted in a new milestone for Det norske," said Eriksen. "In combining Det norske and BP Norway we will accelerate our strategy for Det norske to become a champion on the NCS in terms of lowest cost of production and highest profitability per barrel. We believe the transaction will yield significant value for both Det norske, BP and Aker's shareholders."
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 had a net average production of 60,000 barrels of oil equivalent per day in 2015.
"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," says Bob Dudley, Group Chief Executive of BP.
The full stock exchange notice on the transaction can be downloaded from Det norske's web page www.detnor.no
Investor and analyst call:
Det norske, BP and Aker will host an investor and analyst call at 08:00 CET (0700 BST)
Participant Access - Dial in 5-10 minutes prior to the start time using the number and confirmation code below.
Confirmation code: 3804762
National free phone - United States of America: 1877 280 2296
Local - New York, United States of America: +1646 254 3388
National free phone - Norway: 800 56053
Local - Oslo, Norway: +472350 0486
National free phone - United Kingdom: 0800 279 5736
Local - London, United Kingdom: +44(0)20 3427 1919
Det norske, BP and Aker will host a press conference at 10:00 CET (0900 BST) on 10 June 2016:
Venue: Fornebuporten building B, Oksenøyveien 10, Lysaker
Webcast: A live webcast will be available at www.detnor.no/en
For further information, please contact:
Marianne Stigset, Head of Investor Relations
Phone: +47 24 13 00 66
Mobile: +47 41 18 84 82
Atle Kigen, Head of Corporate Communications
Phone: +47 24 13 00 08
Mobile: +47 907 84 878
This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.