Statoil Agrees on $2.5 Billion Deal for Brazil Oil License -- Update
July 29 2016 - 5:28AM
Dow Jones News
By Kjetil Malkenes Hovland
OSLO--Norway's Statoil ASA said Friday it will acquire a 66%
stake in a Brazil offshore license from Petróleo Brasileiro SA for
$2.5 billion to strengthen its production into the next decade.
Statoil said the BM-S-8 offshore license includes a substantial
part of the Carcará oil field in the Santos basin, one of the
world's largest discoveries in recent years. The company estimated
the license covers recoverable volumes of 700 million to 1.3
billion barrels of oil equivalent.
Brazil's Petrobras, the most indebted oil firm in the world, has
pledged to divest more than $15 billion in assets by the end of
this year in an effort to pay down its debts, but ahead of today's
announcement it had only managed to raise about $2 billion.
The acquisition also comes at a time of rising debt for 67%
state-owned Statoil, which continues to pay dividends to
shareholders and invest in new production. Its debt ratio--debt as
a share of its capital--stood at 31.2% at the end of the first
quarter, up from 22.4% a year earlier.
Statoil said its debt would rise to 32.7% after the transaction,
but it had achieved a competitive price. Brent crude is trading
slightly below $43 a barrel, less than half its levelof two years
ago, and many companies are divesting assets to fund capital
spending and dividends, or to service debt.
"Our balance sheet is still strong, and the timing for such a
transaction is very good in our minds. It's countercyclical," said
Tim Dodson, Statoil's head of exploration. "The value of this asset
will only increase as the oil price recovers."
Statoil shares dropped 0.4% in early trading after the
announcement.
"Although we find Statoil's increase in Brazilian exposure
appealing, we do not believe the market will applaud a $2.5 billion
increase in net debt at this point," said Arctic Securities analyst
Christian Yggeseth.
Statoil said it would pay half the acquisition amount on closing
the transaction, and the remainder when certain milestones have
been met, mainly related to a future agreement on the ownership of
the Carcará field.
Brazil's offshore oil business fits well with the Norwegian oil
and gas producer's wide experience from drilling offshore fields on
the Norwegian continental shelf. Statoil has been in Brazil for 15
years and is the operator and 60% owner of the Peregrino field
which is currently pumping 100,000 barrels a day.
Write to Kjetil Malkenes Hovland at
kjetilmalkenes.hovland@wsj.com
(END) Dow Jones Newswires
July 29, 2016 05:13 ET (09:13 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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