Shares in Lundin Petroleum and Equinor increase after North Sea deal

OSLO (Reuters) – Shares of Lundin Petroleum and Equinor rose on Monday after the Norwegian major reduced its stake in the Swedish company in exchange for an increase in its stake in a major oilfield last year. example of a transaction focused on badets of the North Sea.

Lundin Petroleum shares rose 3.4% at 08:28 GMT, while Equinor shares rose 1.5%, 0.35% higher than the European oil and gas index.

"A historic transaction," said Sparebank 1 Markets in a note to customers, noting that it allowed Equinor to secure the gains from its equity stake in Lundin in 2016 and was the first transaction to enhance the value of the field. from Sverdrup.

It is also the latest transaction focused on North Sea oil badets, following DNO's acquisition of Faroe Petroleum in January and the acquisition of ConocoPhillips' UK oil badets in April, among others.

Under this agreement, Equinor would sell a 16% stake in Lundin Petroleum for approximately $ 1.56 billion and, in return, acquire an additional 2.6% interest in the Johan Sverdrup oilfield for $ 910 million. .

Equinor would still maintain a 4.9% stake in Lundin and increase its stake in the Sverdrup field, which it operates, to 42.6%. The other partners are Aker BP and Total.

Sverdrup, scheduled for production in November, is Norway's largest oil discovery in more than three decades and is expected to account for 25% of the Nordic's total oil output at its peak in 2022.

"This transaction is the very first where we can directly observe the value of Sverdrup," said Sparebank 1 Markets, suggesting that the value of the field could be higher than previous forecasts.

"The value is $ 35 billion for the entire Sverdrup deposit, or $ 11-16 per barrel of oil equivalent (boe)," the report says.

"11 USD / BOE is based on the lower end of the resource range of between 2.2 billion and 3.2 billion BEP and 16 USD / BOE based on the upper end of the resource range. In comparison, we valued Sverdrup at $ 11.9 / boe, "he said.

Bernstein also has a new badessment of the overall $ 35 billion and $ 10.9 to $ 15.9 / boe field on current estimates of recoverable reserves.

"This is above the net present value of our land model of about $ 26 billion in 2019 and about $ 32 billion in 2020 at $ 60 a barrel, which adds to our on the ground with potential increases in recoverable reserves and early start-up, "he said. not to customers.

"Indeed, the implied multiple is ahead of the $ 10.3 per boe paid for more transactions in the North Sea, which confirms the quality of this field."