Norwegian energy major Statoil ASA (NYSE:STO) agreed to divest its stake worth $2.65 billion in North Sea oil fields in a deal, finalized on Monday, with Austrian company OMV (VIE:OMV), in order to unlock capital for investment in recent oil discoveries, including one on the Norwegian continental shelf.
The transaction reduces Statoil’s ownership share in the Gullfaks and Gudrun oil and gas fields to 51 percent from 70 percent and 75 percent respectively, but the Norwegian company retains operatorship on both fields. Statoil exited Schiehallion oil field, operated by BP plc (NYSE:BP), by selling off its minority stake of 5.88 percent, as well as the Rosebank oil and gas field, which is operated by Chevron Corporation (NYSE:CVX), and in which Statoil had a 30 percent stake.
“The Norwegian continental shelf is a world class oil and gas region and Statoil is the largest operator. Over the past years we have delivered strong exploration results and we continue to increase the oil recovery from mature fields. Today’s transaction unlocks resources for continued investment in our core areas,” Helge Lund, president and CEO of Statoil said, in a press statement.
OMV, which recorded a free cash flow of around $2.1 billion in the first half of 2013, said the transaction will be funded mainly through “working capital reductions and disposals from OMV’s downstream business segments as well as the company’s excellent cash flow… and existing credit lines.”
The cash generated from the transaction is expected to address concerns among Statoil’s investors about the company’s rising capital outflows.
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Statoil is in need of capital for developing the Johan Sverdrup field located on the Norwegian continental shelf and is estimated to hold around 3.3 billion barrels of oil. The company, which also plans to invest in oil fields in Brazil and Tanzania, said the transaction will free up about $7 billion to be redeployed in capital expenditure.
Statoil and OMV also have entered an agreement for partnership in research and development in oil recovery and for “optional participation” in 11 of Statoil’s exploration licenses in the Faroe Islands, West of Shetland and the Norwegian North Sea regions.
OMV’s chief executive, Gerhard Roiss, said, in a press statement, that the deal is key to achieving the targets set for 2016. The transaction is expected to close by the end of 2013 and is subject to final approval by state authorities.