SDFI deal clear - Hydro content with higher ownership
Hydro is content to get State Direct Financial Interest (SDFI) shares that significantly boost its ownership stake in two of the company's most important operator fields in Norwegian waters - Oseberg and Grane.
Norsk Hydro has strengthened its position in core operated areas through an agreement with the Norwegian Government to acquire interests in eight licences in the North Sea. These licences cover the Oseberg, Oseberg Øst, Oseberg Sør, Tune and Grane fields, and were previously part of the SDFI on the Norwegian Continental Shelf.
Hydro will pay NOK 3.45 billion for the acquisition. The SDFI has comprised some 40 percent of Norway's oil and gas assets.
"We are very pleased to be able to significantly increase our ownership in Oseberg and Grane, two of Hydro's most important operator fields, at an acceptable price," says Eivind Reiten, Hydro's President and CEO.
"The transaction will strengthen our role as operator and simplify the ownership structure, leading to increased value creation to the benefit of both direct stakeholders and the society as a whole. Hydro will be able to realize synergy effects, as the additional ownership interest can be handled within the present organizational structure. The aquisition of SDFI interest is an important step in Hydro's Oil and Energy growth strategy," he says.
In the Oseberg area Hydro acquires a 14.4 percent interest in licence PL 053, a 7,5 percent interest in PL 079 and divests a 6 percent interest in PL 171B. Hydro also purchases a 10 percent interest in each of PL 190 and PL 034 in the Tune area and a 17 percent interest in PL 169B1 in addition to 5 percent in each of PL169, PL169B2 and PL028C in the Grane area. This increases Hydro's equity from 22.23 percent to 34 percent in Oseberg, from 32.02 percent to 34 percent in Oseberg Sør, from 19.6 percent to 34 percent in Oseberg Øst, from 30 percent to 40 percent in Tune and from 24.4 percent to 38 percent in Grane.
The purchase of SDFI shares will boost Hydro's production by 35,000 barrels of oil equivalents (boe) per day for the remainder of 2002, with an estimated daily peak production increase of 60,000 boe in 2005. The additional production will be 80 percent oil up to 2006, with the proportion of gas gradually increasing from then.
Hydro's SEC proven reserves will grow by approximately 190 million boe, 59 percent of which will be oil.
The transaction will be presented in Hydro's consolidated accounts as an investment of NOK 5.8 billion. In addition to the purchase price of NOK 3.45 billion, this figure includes approximately NOK 200 million in investments in the purchased interests after January 1 this year, and approximately NOK 2.1 billion calculated as deferred tax (non-cash item). The transaction will come into effect on March 19.
"Sale of SDFI stakes" (Press release from the Norwegian Ministry of Petroleum and Energy, 2002-03-19)