Norwegian oil and gas firm Equinor has agreed to divest its 16% stake in Lundin Petroleum for approximately $1.56bn, and in return acquire a 2.6% direct ownership share in Johan Sverdrup oilfield.
Equinor agreed to sell about 54.5 million Lundin shares at SEK 266.4 ($28.22) per share. The company will retain a 4.9% stake in Lundin.
The Norwegian firm will acquire a 2.6% stake in the Equinor operated Johan Sverdrup field for a cash consideration of $910m. The oilfield is expected to start production in November.
Equinor president and CEO Eldar Sætre said: “Since 2016 we have more than doubled the value of our investment in Lundin. This transaction gives us the opportunity to capitalize on this value creation, and at the same time increase our direct ownership in the Johan Sverdrup field.”
As per the deal, Equinor will pay up to $52m to Lundin in 2025 if Johan Sverdrup field proves to be at the upper end or above the indicated resource range of 2.2-3.2 bn boe.
The Lundin transaction is being implemented via a total return swap agreement, where the company’s shares will be purchased by Sparebank 1 Markets and subsequently redeemed.
The deal is subject to several conditions, including customary government approval.
Equinor expects to close the acquisition of the interest in Johan Sverdrup by the fourth quarter of this year.
Lundin said the transaction will immediately add to its per-share earnings.
Lundin Petroleum chairman Ian H Lundin said: “The chance to redeem the majority of Equinor’s holding in Lundin Petroleum at a discount to the market and before the pivotal start-up of the Johan Sverdrup development project in November this year, was an opportunity which rarely comes along.
“The Transaction provides us with a rationalised shareholder structure and all shareholders with enhanced leverage to the ongoing success of Lundin Petroleum, at a time when we continue to unlock further upside potential from our existing asset base and execute on our proven organic growth strategy.”
Situated 155km west of Stavanger, the Johan Sverdrup field was discovered in 2010, along with the discovery of the Avaldsnes prospect in PL501 by Lundin Norway, followed by Aldous in PL265 by Statoil in 2011.
The field will be developed in multiple phases and with several fixed platform installations.