The Norwegian oil and gas giant will hold a 4.9% stake in the Swedish company while increasing its ownership in the Johan Sverdrup field

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Image: Equinor will increase its stake in the Johan Sverdrup field to 42.6%. Photo: courtesy of Equinor ASA.

Equinor has agreed to offload a stake of 16% in Lundin Petroleum for about $1.56bn (£1.25bn) and has signed a deal with the same company to acquire a direct stake of 2.6% in the Johan Sverdrup field for $910m (£726.35m).

Equinor will have reduced stake in Lundin and an increased stake in Johan Sverdrup field

As per the terms of the agreements, Equinor will sell close to 54.5 million shares in Lundin Petroleum at a price of SEK266.4 (£22.55m) per share.

Upon completion of the deal, Equinor will hold a stake of 4.9% in the Swedish oil and gas company and continue to be a supportive shareholder.

Following the completion of the other transaction, Lundin Petroleum’s stake in the Johan Sverdrup field will be reduced to 20%, while the Norwegian oil and gas giant will increase its stake to 42.6%.

The Swedish company will be entitled to be paid a contingent payment of up to $52m (£41.51m) in 2025, as included in the consideration, if the Johan Sverdrup field proves to be at the upper end or above the estimated resource range of 2.2-3.2 billion boe.

Johan Sverdrup, located approximately 150km away from the coast of Stavanger, Norway, is one of the biggest oil fields in the Norwegian continental shelf.

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.”

Equinor said that the transaction is being carried out through a total return swap agreement, under which shares in the Swedish oil and gas company will be acquired by Sparebank1 Markets and redeemed subsequently. Subject to certain conditions such as customary government approval and shareholders’ approval of Lundin Petroleum, the transaction is expected to be closed later this month.

On the other hand, the Johan Sverdrup transaction is likely to be closed by the fourth quarter of 2019.

Lundin Petroleum chairman Ian 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.”