OSLO: Norwegian oil firm Det norske said on Wednesday it had agreed to buy Sweden’s Svenska Petroleum’s Norwegian business for $75 million.
The acquisition of the business, which has stakes in 13 discoveries in Norway, will be funded by cash and undrawn debt, Det norske said in a statement.
“This increases our ownership in attractive discoveries with resource upside potential and is a logical bolt-on acquisition for Det norske, given the overlap in our asset portfolios,” Chief Executive Karl Johnny Hersvik said.
A spokesman for Det norske said the firm expected a “good upside” to the petroleum resources in Svenska’s portfolio, but declined to quantify the potential size or the oil price at which developments could become profitable.
Brokerage DNB Markets earlier this week estimated the recoverable resources of Svenska Petroleum’s Norwegian business at 99 million barrels of oil equivalents (boe), or about 2.1 percent of Norway’s overall resources.
Norway’s top resources owner is Statoil, with an estimated 1.357 billion boe, while Det norske holds an estimated 216 million boe, DNB Markets said.
The future development of Svenska’s discoveries will to a large degree be funded by cash flow from the giant Johan Sverdrup oil field, which is due to come on stream in late 2019, Det norske said.
The transaction is expected to close in the first quarter of 2016 and is subject to regulatory approvals.
Svenska held a tax loss carry forward equal to an after-tax value of around 130 million Norwegian crowns ($16 million), which is expected to be offset against Det norske’s taxes paid for the fiscal year 2015, the company said.
Svenska’s 13 licences in Norway include a 25 percent stake in the Krafla/Askja discovery, 20 percent in Garantiana, 40 percent in Frigg Gamma Delta and 25 percent in Fulla/Lille-Frigg, all of which are in the North Sea.
In addition, the company holds four exploration licences in the Norwegian Sea.
At 0900 GMT, Det norske shares were down 0.4 percent at 53.75 crowns.