Norwegian firm Det norske oljeselskap (Det norske) has signed a $1.3bn agreement with BP to merge with BP Norge in a bid to create the largest Norwegian independent oil and gas producer.
Det norske expects the merger deal to significantly boost the combined company’s operations, cost efficiency and growth potential while allowing the company to initiate dividend payment.
Based at Fornebuporten, Norway, the new entity will be named as Aker BP ASA (Aker BP) and will combine assets and expertise from both companies’ Norwegian exploration and production operations.
Aker, the Det Norske’s major shareholder, will have 40% stake in the combined company while BP and other Det norske shareholders will have 30% stakes each.
BP group CEO Bob Dudley said: "BP and Aker have matured a close collaboration through decades, and we are pleased to take advantage of the industrial expertise of both companies to create a large independent E&P company.
"The Norwegian Continental Shelf represents a significant opportunity going forward and we are looking forward to working together with Aker to unlock the long term value of the company through growth and efficient operations.
"This innovative deal demonstrates how we can adapt our business model with strong and talented partners to remain competitive and grow where we see long-term benefit for our shareholders."
Aker BP will have a portfolio of 97 licenses on the Norwegian Continental Shelf which include an estimated 723 million barrels of oil equivalent P50 reserves, with a 2015 joint production of approximately 122,000 barrels of oil equivalent per day.
Det norske board of directors chairman Øyvind Eriksen said: "Together, we are establishing a strong platform for creating value for our shareholders through our unique industrial capabilities, a world-class asset base, and financial robustness."
Subject to customary closing conditions, regulatory review and approval by Det norske shareholders, the merger deal is scheduled to be completed by the end of 2016.
The Aker BP is estimated to reach production capacity to more than 250,000 barrels of oil equivalent per day by the early 2020s.
Image: Det norske expects the merger deal with BP to significantly boost the combined company’s operations and cost efficiency. Photo: courtesy of photographer/Det norske.