OMV AG (ADR) (OTCMKTS:OMVKY) (ETR:OMV) (FRA:OMV) announced this morning that it has acquired the North Sea assets of the Norwegian company Statoil ASA (NYSE:STO) for USD $2.65 billion. The company claims that this transaction will materially enhance OMV’s upstream portfolio.


OMV to acquire 24 percent stakes in Gudrun field

OMV AG (ADR) (OTCMKTS:OMVKY) (ETR:OMV) (FRA:OMV) has agreed to acquire 19% in the producing Gullfaks field and 24% in the Gudrun field. Both of these oil and gas producing fields are located in the offshore Norwegian Continental Shelf. In addition, OMV will take over 30% in Rosebank and around 5.88% in Schiehallion, both fields located west of the Shetland Islands where OMV already holds a stake in. The agreement with Statoil ASA (NYSE:STO)l also involves options for 11 exploration licenses.

“An integral part of the transaction is a research and development partnership with Statoil ASA (NYSE:STO) to develop new technologies for the exploration of gas and oil from mature fields. OMV’s comprehensive expertise in onshore enhanced oil recovery is an ideal complement to Statoil’s experience in offshore enhanced oil recovery,” says the Austrian oil giant.

Also see: Lower Refining Margins Hurts EBIT for OMV

Partnership agreement to increase oil production

This transaction will increase OMV’s proven and probable oil and gas reserved by 320 million boe (barrels of oil equivalent) and the production by approximately 40,000 boe per day by 2014. Current reserves held by OMV stand at 1.7 billion boe and the production stands at 299,000 boe per day for the first half of 2013. This means that OMV will experience an 18% increase in their reserves and a 13.4% expansion in its production.

The agreement price of USD 2.65 billion is for the effective date January 1, 2013 and is subject to adjustments for the year 2013 which are estimated at about USD 500 million. OMV will fund this purchase out of its working capital proceeds and the company will avoid the contingencies associated with loans. The company saw excellent cashflows (free cash flows of about EUR 1.6 billion) in the first half of 2013, the results for which were released last week.

OMV’s projects in Norway

OMV already has a strong presence in Norway and the North Sea region and operates via a subsidiary in this area. OMV is currently participating in ongoing field development projects including Aasta Hansteen, Zidaen and Edvard Grieg as well as the infrastructure project Polarled. The company is also involved in exploration activities in border area in the northern parts of Norwegian Sea and Barents Sea. OMV currently holds twenty-three licenses in Norway with eleven of these in the Barents Sea, eleven in the Norwegian Sea and one in the North Sea. Nine out of the total twenty-three licenses are operated by OMV.

This transaction is also seen as a positive step by the Statoil ASA (NYSE:STO) management. Analysts are skeptical of how this Norwegian multinational will achieve its target of lifting production to 2.5 million boe by 2020, from about 2 million boe the previous year. Statoil, on the other hand, states that it will capture value created through asset development and unlock capital for investment in high return projects in core areas.