British firm Faroe Petroleum has signed an agreement to swap its oil and gas assets in Norwegian Sea and the North Sea region of the Norwegian Continental Shelf (NCS) with Equinor.

The transaction will allow Faroe to acquire interests in four production assets on the NCS, including the Alve, Marulk, Ringhorne East and Vilje projects.

In return, Equinor will receive Faroe’s stakes in the Njord, Hyme redevelopment and Bauge development assets.

Faroe noted that the swap-deal will enable it to achieve better portfolio balance between production and development. In addition, the transaction is expected to add 7,000 to 8,000 barrels of oil equivalent per day (boepd) for the company next year and reduce capital requirements through the divestment of its assets to Equinor.

Faroe Petroleum chief executive Graham Stewart said: “I am pleased to announce this significant swap transaction, which is in line with our stated strategy of delivering shareholder value through active portfolio management.

“The transaction will accelerate delivery of our fully-funded production target, while strengthening further our financial position.”

“It immediately rebalances our asset mix towards production after a series of exploration successes and resultant development projects. The transaction will accelerate delivery of our fully-funded production target, while strengthening further our financial position in advance of reaching investment decisions on our new Iris/Hades and Agar discoveries.”

Equinor already owns a 20% interest in the Njord project and expects to have greater exposure to its potential through the acquisition of Faroe’s 7.5% stake.

Equinor Operations North senior vice-president Siri Espedal Kindem said: “We are strengthening our operated position in the prolific Njord area, which we believe continues to have considerable upside potential.”

Production at the Njord field stopped in 2016. Currently, upgrade works are in progress on the Njord platform and the storage vessel and the partners expect to resume production in 2020.

The deal comes after Norwegian oil and gas firm DNO made a hostile bid to acquire Faroe Petroleum for $778m. DNO already owns 28.22% of the company. Faroe, however, rejected the offer saying it undervalued the company.

Commenting on the timing of the Equinor transaction, Stewart told Reuters that the company has been working on the deal before DNO’s takeover bid.