DETNF Aker BP Asa (PK)

By Selina Williams, Kjetil Hovland Malkenes and Ian Walker 

LONDON-- BP PLC said Friday that it is going to spin off its Norwegian oil and gas fields, combining them in a new, publicly traded company with properties from Norwegian firm Det Norske Oljeselskap ASA.

The new company, to be known as Aker BP ASA, will have the highest output of any European petroleum exploration-and-production company--the half-dozen or so firms with higher production are integrated giants that also refine crude.

Under the agreement, Det Norske will give BP shares worth $1.3 billion for its Norwegian assets. BP will have a 30% share of the new company. Det Norske's major shareholder, holding company Aker ASA, which is controlled by billionaire Kjell Inge Rokke, will have a 40% interest and other Det Norske investors the remaining 30%. The new company will be listed on the Oslo Stock Exchange.

The deal will give BP a small interest in a prized field operated by Statoil ASA and slated to go online in 2019. It could also increase BP's future production from Norway, a country where its output lags behind rivals such as Total SA, Exxon Mobil Corp and Eni SpA.

BP has been selling properties that aren't at the core of its expansion plans--such as aging fields--in the years since its 2010 Deepwater Horizon blowout killed 11 workers and spilled oil into the Gulf of Mexico. The Norway deal gets older assets off BP's books and under the management of a smaller and potentially more efficient operator. And BP gets a stake in newer fields with greater growth prospects.

The announcement comes during energy-industry turmoil after a two-year collapse in oil prices. Big and small producers have been slashing jobs and canceling projects to shore up their balance sheets.

Despite a recent rally in oil prices to more than $50 a barrel--nearly double January levels--the price remains at less than half of 2014 highs. So companies remain cautious. BP's deal reflects that caution, BP Chief Executive Bob Dudley said at a news conference Friday.

"The need for choosing how to spend money and capital very carefully is right at the forefront of everyone in oil and gas," Mr. Dudley said. Norway has the potential for production growth without having to find new assets to develop elsewhere, he added, so he wants BP to continue doing business there.

"The idea of just selling the assets and leaving this country is just not an option for us," he said.

Through Det Norske, BP will get a 3.48% stake in the offshore Johan Sverdrup field. It is one of Norway's biggest new petroleum projects and has oil that can be produced profitably at prices below $30 a barrel, Statoil has said. It is due to start producing in 2019.

Production for the combined company of 120,000 barrels of oil equivalent a day will make it the largest independent oil-and-gas exploration and production company in Europe by output, taking it ahead of rivals such as Africa-focused Tullow Oil PLC.

BP said the new company's output could more than double to 250,000 barrels of oil equivalent a day by 2023, once new fields are developed.

Olaug Svarva, the director of Folketrygdfondet, Det Norske's second-biggest shareholder, called the deal "very positive."

Under the terms of the deal, Det Norske will issue 135.1 million shares at NOK80 ($9.74) each to BP as compensation for its shares in BP Norge, including assets, a tax loss carry forward of $267 million and a net cash position of $178 million. Aker will buy 33.8 million shares from BP at the same price.

Aker BP will introduce a quarterly dividend with the first payment planned for the fourth quarter of this year.

The transaction is expected to complete in the third quarter of this year.

Write to Selina Williams at selina.williams@wsj.com and Ian Walker at ian.walker@wsj.com

(END) Dow Jones Newswires

June 10, 2016 10:36 ET (14:36 GMT)

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