Italy's Eni SpA (NYSE: E) increased its Norwegian presence with a view to extracting more offshore oil on July 2 by merging its subsidiary there with privately-owned Point Resources AS, in the sector's latest round of consolidation.
The new company, named Vaar Energi and led by Point Resources' Vice President Kristin F. Kragseth, will be one of the largest players on the Norwegian continental shelf with a portfolio of 17 producing oil and gas fields.
Recent deals include Point Resources buying assets operated by Exxon Mobil Corp. (NYSE: XOM) off Norway last year, and BP Plc (NYSE: BP) merging its Norwegian business with Norway's Det norske in an all-share deal in 2016, creating Aker BP.
But while BP became a minority shareholder in Aker BP, Eni will own 69.6% of its newly merged operation, with private equity investor HitecVision owning the remainder.
The new company will have a daily output of around 180,000 barrels of oil equivalents (boe), Eni said in a statement.
"This is a fundamental step ahead in our strategy to reinforce Eni's presence in OECD countries with further upstream potential, such as Norway," Eni CEO Claudio Descalzi added.
Mediobanca oil analyst Alessandro Pozzi said the move gave Eni "critical mass" in Norway and helped reduce risk in its portfolio.
Vaar Energi plans to invest more than 65 billion Norwegian crowns (US$7.9 billion) over the next five years to develop new resources, which could help to boost daily output to 250,000 boe by 2023, Eni said.
Vaar Energi's combined reserves and resources total more than 1.3 billion barrels boe, it added.
The merger is expected to be completed by the end of 2018, pending regulatory approvals. (US$1 = 8.1841 Norwegian crowns)
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