OSLO (Reuters) -Norwegian oil company DNO has agreed to buy rival Sval Energi from private equity group HitecVision in a deal valued at $1.6 billion, it said on Friday, marking further consolidation among North Sea oil and gas producers.
The purchase of the cash-generating Sval Energy portfolio could be followed by acquisitions of other assets in Norway and elsewhere to fulfil DNO’s growth ambitions, Executive Chairman Bijan Mossavar-Rahmani said on a call with analysts.
The transaction, involving a $450 million cash payment for 100% Sval’s shares plus assumption of debt, accelerates DNO’s pivot back to its North Sea roots after decades of exploration and production in the Middle East.
Shares in Oslo-listed DNO were up 6.9% by 1125 GMT, outperforming a 0.3% drop in the wider European oil and gas index, bringing the company’s year-to-date gain to 15%.
The deal will quadruple DNO’s North Sea production to about 80,000 barrels of oil equivalent per day (boepd) and lift its total output to around 140,000 boepd based on pro-forma 2024 data, it said.
DNO’s remaining production comes primarily from two fields in the Kurdistan region of Iraq, where the company has been forced to sell oil at a discount owing to a legal dispute over the shutdown of an export pipeline to Turkey in 2022.
The Iraqi federal government, the Kurdistan Regional Government (KRG) and the international oil companies operating in Kurdistan are discussing a potential resumption of pipeline exports.
But while DNO’s cash flow would rise, its leverage was also set to increase significantly and the Kurdish exposure adds uncertainty, DNB Markets said in a note, adding that a spin-off could be one way to mitigate the risk.
“We are not turning away from Kurdistan, we are just developing the North Sea business to be on par with Kurdistan,” said DNO Managing Director Christopher Spencer.
Sval holds stakes in 16 fields off the Norwegian coast, including in ConocoPhillips-operated Ekofisk, with net total production of 64,100 boepd in 2024, split roughly equally between liquids and gas.
The acquisition will be financed with existing cash and other debt financing, DNO added.
(Reporting by Terje Solsvik and Nerijus AdomaitisEditing by Anna Ringstrom and David Goodman)
