Equinor agrees $1bn Norwegian asset sale to Sval
Equinor has agreed to sell its interest in the Greater Ekofisk Area and reduce its stake in the Martin Linge field to private equity-backed Sval Energi for at least $1bn, the companies reported on May 10.
The deal covers Equinor's 7.6% stake in Ekofisk licences PL1018, PL018B and PL275, comprising the Ekofisk, Eldfisk and Embla fields, and its 6.6% position at the Tor Unit. The company is also divesting a 19% stake in Martin Linge, reducing its interest to 51%. It remains the project's operator.
In addition, Equinor is selling its 18.5% interest in Norpipe Oil, which carries oil from the Greater Ekofisk Area to shore. Beyond the $1bn sum, the company will also receive additional payments from Sval for the assets, based on oil and gas prices in 2022 and 2023.
The Greater Ekofisk Area is operated by ConocoPhillips with a 35.1% interest, while other partners include TotalEnergies with 39.9%, Var Energi with 12.4% and Petoro with 5%. Ekofisk was Norway's first field to start production in 1971, and while it is now in decline, ConocoPhillips and its partners continue to invest in new projects in the area. Earlier this month, the US major submitted a 10.5bn kroner ($1.2bn) plan for the Eldfisk North project, expected to recover between 50 and 90mn barrels of oil equivalent.
Linge finally came on stream in June 2021, following years of delays and cost overruns. The geologically-complicated field ended up costing 63bn kroner ($7.3bn) to develop, or double the cost envisaged when development plans were filed in 2012. Thanks to soaring oil and gas prices, however, Equinor expects to fully recoup its investments in the project this year.
"With this transaction we are optimising our oil and gas portfolio in line with Equinor's strategy, capturing value from several of our assets," Equinor said in a statement. By selling its limited position in the Greater Ekofisk Area when prices are high, the company said it could redirect capital to other core business areas, and bringing on board Sval at Linge also created value.
For Sval, which will gain 30,000 barrels of oil equivalent/day of production from the purchase, this marks the company's seventh acquisition since it was formed by private equity group Hitecvision and other investors in 2019. Sval also agreed to buy Spirit Energy's Norwegian portfolio in December last year, for over $1bn.
"The transaction fits well with our growth ambition and portfolio," Sval said. "Following the completion of this transaction and the Spirit Energy Norway acquisition, Sval will continue its growth trajectory in the coming years."