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Var Energi acquires ExxonMobil's Norwegian upstream assets in $4.5 billion deal



After much industry speculation, ExxonMobil has confirmed this week that it will be exiting its Norwegian upstream operations, with Var Energi agreeing to acquire the assets for $4.5 billion. The deal follows a previous announcement in which ExxonMobil said it would be divesting approximately $15 billion in non-strategic assets by 2021.
Var Energi acquires ExxonMobil's Norwegian upstream assets in $4.5 billion deal
(Image via Var Energi).

The transaction includes ownership interests in more than 20 producing fields. The fields are largely operated by Equinor, including Grane, Snorre, Ormen Lange, Statfjord and Fram, with a combined production of approximately 150,000 barrels of oil equivalent per day (boepd) in 2019.

On completion of the deal (which is expected to take place in Q4 2019) Var Energi will become the second largest E&P company on the NCS after Equinor, with total reserves and resources of about 1,900 million boe. Total production is expected to be about 300,000 boepd in 2019, growing organically to more than 350,000 boepd in 2023 as the company invests about $7 billion in development projects such as Johan Castberg, Balder X and Grand in the 2020-23 period.

Neil Chapman, senior vice president of ExxonMobil, explained the rationale for the divestment saying:

“Our objective is to have the strongest, most competitive Upstream portfolio in the industry. We’re achieving that by adding the best set of projects we’ve had in many years and divesting assets that have lower long-term strategic value. This sale is an important part of our divestment program, which is on track to meet our $15 billion target by 2021.”

The acquisition marks an important milestone both for Var Energi and the company’s shareholders Eni and HitecVision, delivering on the growth ambitions set out when merging Point Resources and Eni Norge to create Var Energi in 2018.

Kristin Kragseth, Chief Executive of Var Energi commented on the deal saying:

“This transaction is a major milestone in the short history of Var Energi and a proof of our commitment to further develop the NCS. In delivering on our ambitious growth plans, Var Energi will not only be a major force on the shelf, we are also creating major opportunities for Norwegian suppliers in the years to come, securing employment in many parts of the country. It also gives me great pleasure to welcome our previous colleagues in ExxonMobil into Var Energi. Our priority will be to continue to operate in a safe and environmentally responsible manner.”

As we’ve written about previously here at EngineeringPro, deals such as the one above are increasingly becoming the norm across the North Sea as majors divest and independents move in, attempting to use their leaner business models to profit in a tougher operating environment. 

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Var Energi acquires ExxonMobil's Norwegian upstream assets in $4.5 billion deal - Time to read 3 min
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