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2023 for an initial fixed consideration of USD 220 million (the “Acquisition”).
[image]
Statfjord C. Source: Equinor
Highlights
· Acquisition of 28% WI in PL037 from Equinor, comprising 23.93123% WI in
Statfjord Unit, 28% WI in Statfjord Nord, 14% WI in Statfjord Øst Unit and 15.4%
WI in Sygna Unit
· Effective date 1 January 2023 with expected completion in Q4 23
· Initial fixed consideration of USD 220 million including tax balances of
approximately NOK 300 million
· In addition, the agreement contains contingent payment terms applicable for
2023-25 for certain thresholds of realised oil and gas prices
· Net 2P reserves of 41 mmboe and net 2C resources of 8 mmboe
· Additional upside volume potential estimated to net 14 mmboe, identified by
OKEA based on drilling beyond 2028 and cost reduction initiatives
· Adds production in 2023 of 13,000 - 15,000 boepd and expected to grow to
16,000 - 20,000 boepd in 2024
· Equinor to retain responsibility for 100% of OKEA’s share of total
decommissioning costs related to Statfjord A
· OKEA liable for its share of costs related to the decommissioning of
Statfjord B and C. However, Equinor retains responsibility for decommissioning
costs relating to any full or partial removal of Statfjord B and C gravity-based
structures, should it be required
· No new financing required for funding the transaction as majority of
purchasing price, based on current forward prices, will be covered by cash flows
generated by the assets prior to completion
OKEA CEO, Svein J. Liknes stated: “We are very pleased to announce this
transaction with Equinor which represents another significant step in delivering
value-accretive growth in line with our strategy. Through this acquisition, we
are increasing production to well above 40,000 boepd in 2024, nearly three times
higher than production at the time of launching our growth strategy in the fall
of 2021. In addition, we are diversifying our asset base further without the
need for any new financing. We look forward to initiating a fruitful cooperation
with Equinor and their FLX team and continuing to create value as a leading mid-
to late-life operator.”
Transaction details
OKEA will acquire a 23.93123% WI in Statfjord Unit, 28% WI in Statfjord Nord,
14% WI in Statfjord Øst Unit and 15.4% WI in Sygna Unit from Equinor for an
initial fixed cash consideration of USD 220 million based on effective date 1
January 2023. The acquisition price includes tax balances of approximately NOK
300 million.
In addition to the fixed consideration, the agreement contains a contingent
consideration structure based on profit sharing on crude oil volumes sold at a
realised price of 75-96 USD/bbl in 2023, 64-85 USD/bbl in 2024, and 53-72
USD/bbl in 2025, as well as on dry gas volumes sold at a realised price of 170
-341 p/th in 2023, 125-248 p/th in 2024, and 37-75 p/th in 2025. The profit
sharing within these limits is 90% after tax to Equinor and 10% to OKEA. For
realised prices on crude oil above 96 USD/bbl in 2023 and 85 USD/bbl in 2024 and
realised prices on dry gas above 341 p/th in 2023 and 248 p/th in 2024 the
profit sharing is on 50/50 after tax basis. OKEA keeps 100% of realised oil
prices above 72 USD/bbl and gas prices above 75 p/th in 2025. All numbers are
stated in real 2023 and realised prices are based on annual averages. There is
no contingent payment structure for NGL.
Equinor will retain responsibility for 100% of OKEA’s share of total
decommissioning costs related to Statfjord A, while OKEA will be liable for its
share of decommissioning costs related to Statfjord B and C. However, Equinor
will retain responsibility for any decommissioning costs relating to a full or
partial removal of the gravity-based structures, should it be required
OKEA will pay Equinor USD 48 million (real 2023) in 2028 as decommissioning
security which will be repaid to OKEA at 4% p.a. real interest until abandonment
is completed.
No new financing is required for funding the transaction as the majority of the
purchasing price, based on current forward prices, will be covered by cash flows
generated by the assets prior to completion.
The transaction is conditional upon Norwegian governmental approval and is
expected to be completed in Q4 23.
Strategic rationale
The transaction matches OKEA’s strategy as a leading mid to late-life NCS
operator focused on growth, value creation and capital discipline. The
significant increase in production, reserves and resources, adds scale and
diversification and enhances robustness in the portfolio. In addition, the
transaction represents the initiation of a partnership with a dedicated and
competent operator in the Equinor FLX team which is committed to safe
operations, increased recovery, and reducing costs and CO\2\ emissions. OKEA
will contribute with management and operating experience.
Facts about the Statfjord Area
The Statfjord Area comprises the Statfjord Unit, Statfjord Øst Unit, Statfjord
Nord and Sygna Unit. The Statfjord Unit development covers the Statfjord A, B
and C concrete gravity-based platforms. The other fields are subsea developments
tied back to the main field platforms.
Statfjord Area is one of the largest fields on the NCS in terms of initial oil
in place which was in excess of 6 billion barrels. Statfjord A was put on
production in 1979, followed by Statfjord B in 1982 and Statfjord C in 1985. The
field is operated by Equinor and the Field Life extension (FLX) unit was
established in 2020 with an ambition to deliver 200% increase in remaining
reserves, 25% cost reduction and 50% CO\2\ reduction in the Statfjord Area by
2030. The FLX unit focuses on safe operations, improving recovery from the field
as well as reducing costs and CO\2\ emissions and has a strong track record of
deliveries in recent years.
Presentation to analysts and investors
OKEA will hold a presentation to analysts and investors at 10:00 CET today, 20
March 2023. Please see dial-in details below. The presentation material is
attached hereto.
Microsoft Teams meeting
Join on your computer, mobile app or room device
Click here to join the meeting (https://teams.microsoft.com/l/meetup
-join/19%3ameeting_YWFmN2IyYzEtYmU3NS00MDVmLTllYmItOGUwMWMxZmI4ZDQ5%40thread.v2/0
?context=%7b%22Tid%22%3a%22f4d0f33e-32cb-4b0c-aafe
-6e0cefbc9ea9%22%2c%22Oid%22%3a%225ac6e692-472d-4c9e-9b7d-b39e94ee6e51%22%7d)
Meeting ID: 381 439 128 489
Passcode: tMQbHX
Join with a video conferencing device
okea@m.webex.com
Video Conference ID: 129 621 652 5
Or call in (audio only)
+47 21 40 20 58,388535836# (http://tel:+4721402058,388535836# ) Norway, Oslo
Phone Conference ID: 388 535 836#
For further information, please contact:
CEO Svein Liknes, +47 917 67 704
CFO Birte Norheim, +47 952 93 321
VP IR & Communication Anca Jalba, +47 410 87 988
About OKEA
OKEA ASA is a leading mid- to late-life operator on the Norwegian continental
shelf (NCS). OKEA finds value where others divest and has an ambitious strategy
built on growth, value creation and capital discipline.
OKEA is listed on the Oslo Stock Exchange (OSE:OKEA)
More information at www.okea.no
This information is considered to be inside information pursuant to the EU
Market Abuse Regulation and is subject to disclosure requirements pursuant to
Section 5-12 of the Norwegian Securities Trading Act.
The stock exchange announcement was published by Anca Jalba, VP IR &
Communication, OKEA ASA on 20 March 2023 at 07:00 CET.
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