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Det Norske mulls share, asset sales to fund Sverdrup development

BY MIKAEL HOLTER

TRONDHEIM, Norway (Bloomberg) -- Det Norske Oljeselskap ASA, part-owner of Norway’s biggest offshore oil discovery in decades, will consider selling assets or new shares to fund the project.

Det Norske will also study increasing debt to finance development of the Johan Sverdrup field, COO Oeyvind Bratsberg said in an interview. The company has no plans to reduce its ownership of the deposit.

“We can’t rule out anything but all our funding plans are based on us keeping our share in Sverdrup,” he said. “We’re in a good financial position considering where the company is today and will continue to increase our funding as the need arises.”

Det Norske, which today posted a wider quarterly loss, has stakes of 20 percent and 22 percent in two of three licenses at Sverdrup. The find, which may be Norway’s biggest since 1974, has renewed optimism in Norway’s oil industry after a decade of falling output from aging North Sea fields. Operator Statoil ASA has said first-phase investments will be as much as 120 billion kroner ($20 billion), with as many as three phases to follow.

“As part of the total financing picture, we can’t rule out issuing new shares,” Bratsberg said. It’s also “clear that we’ll have to consider taking on more debt.”

The Norwegian company has two bonds outstanding, totaling 2.47 billion kroner, and entered into a $1 billion revolving credit facility in September that can be doubled. The Trondheim-based explorer raised 1 billion kroner in 2012 by selling new shares, and 50 percent holder Aker ASA has said it would participate in any further equity issues.

Det Norske may sell part of its 35 percent holding in the North Sea Ivar Aasen field. It will still retain a “major stake” and remain operator of the project, due to start output in 2016, Bratsberg said. It may also cut its 25 percent holding in the Krafla and Askja discoveries and other assets, according to the executive, who said Det Norske isn’t currently in talks to sell offshore assets or speaking to Aker about selling stock.

Det Norske’s fourth-quarter net loss widened to 329 million kroner from 47 million kroner a year earlier, the company said in a statement. While output grew almost 60 percent to 4,300 barrels of oil equivalent a day, the company booked impairment charges on producing fields such as Jette.

Det Norske fell as much as 6.5 percent, the most since Dec. 20, to 64.55 kroner in Oslo. The stock traded at 65.90 kroner at 1:30 p.m. local time.

Sverdrup, with as much as 2.9 billion barrels of oil, is set to become the country’s most productive field in the next decade. The deposit may reach peak output of 650,000 barrels of oil a day as early as 2023, Bratsberg said.

The field partners, which also include Lundin Petroleum AB, Maersk Oil and Petoro AS, expect the recovery rate to reach as much as 70 percent. Recovery will initially be planned at about 60 percent, Det Norske said today.

Sverdrup’s development may require 80 to 100 wells, according to Bratsberg. Statoil last week said the first phase alone may need as many as 50 wells.

02/19/2014

 

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