Statoil Raises $1.3B through Adjustment of NCS Portfolio

Norwegian energy firm Statoil ASA STO intends to raise cash proceeds of $1.3 billion by farming down in Aasta Hansteen, Asterix and Polarled. The deal also entails an exit from its non-core Vega and Gjoa fields as well as a farm-down of four exploration licenses in the Voring area, in a transaction with Germany's Wintershall.  

The transaction involves a cash consideration of $1.25 billion and an additional $ 50 million to be received, subject to the achievement of certain benchmarks at Aasta Hansteen. The transaction is expected to raise an accounting gain of $0.7–0.9 billion, which will be adjusted for activity between the effective date Jan 1, 2014 and the closing date.

As a result of the deal, Statoil's stake in Aasta Hansteen has decreased to 51% from 75%, while its interest in the Asterix field has changed to 51% from 70%. The company's stake in Polarled has reduced to 37.1% from 50.3%. Statoil retains the operatorship at all three fields after the farm down.

After the farm down, Statoil's stake in exploration license 602 has changed to 40% from 30%, while its interest in exploration licenses 603, 528 and 528B has been reduced to 25% from 35%.

Capital expenditure of about $1.8 billion has been  released from the transaction for the period from the effective date through to the end of 2020. In the first half of 2014, Statoil's production from the divested Gjoa and Vega assets was 22.000 barrels of oil equivalent per day. The transaction comprises a transfer of operatorship of the sub-sea field Vega, but does not entail transfer of personnel.

Statoil plans to make an annual investment of around $20 billion between 2014 and 2016. This includes the NCS project Gudrun that was commissioned in Apr 2014. Valemon is expected to start production toward the end of the year. The company has extensive plans for exploration, with 50 exploration wells projected globally for 2014.

Statoil now carries a Zacks Rank #3 (Hold). Better-ranked stocks to consider in the same industry include Cameron International Corporation CAM, Valero Energy Partners LP VLP and Sunoco Logistics Partners L.P SXL. All of these stocks sport a Zacks Rank #1 (Strong Buy).

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