Norway oil rouses Wintershall as M&A deals set to gain momentum

By Mikael Holter on 9/11/2017

OSLO (Bloomberg) -- When a recovery in crude prices sparks more deals in Norway’s oil industry, BASF SE’s Wintershall AG unit will be among those looking for opportunities.

“Once oil prices increase, momentum will occur,” Wintershall CEO Mario Mehren said in an interview. “Norway’s attractive for M&A activities as they take place very transparently and the framework’s stable.”

Wintershall has spent almost $3 billion acquiring assets in Norway from state-controlled Statoil ASA since 2012, boosting its production in the country more than 25-fold in the period to about 80,000 boe.

Transactions in the Nordic nation have picked up since 2016, with BP Plc and ExxonMobil Corp. striking billion-dollar deals, while utilities such as Engie SA and DONG Energy A/S also sold assets. Acquirers have been smaller companies, sometimes backed by private equity, mirroring deals on the UK side of the North Sea. Wintershall is ready to join the next wave of activity.

“All is possible: buying, selling, swapping,” Mehren said in the interview in Kassel, Germany.

The company is also set to increase output through its own development portfolio, with the 180-MMbbl Maria oil field in the Norwegian Sea starting production early next year, ahead of the initial plan and below a budget of 15.3 billion kroner ($2 billion), Wintershall said.

Barents Sea

Wintershall will also continue to participate in licensing rounds focusing on Norway’s Arctic Barents Sea, Mehren said. The company was among 39 applicants in a mature-area round in the region, the Petroleum and Energy Ministry said on Thursday.

“The Barents Sea is one of Europe’s last regions that hasn’t been fully explored yet,” Mehren said. “It’s important to take part as we need to replace each barrel and every cubic meter we produce.”

Western Europe’s biggest oil and gas producer is betting on exploration success in the Barents to create a new hub capable of arresting a decline in output as North Sea fields are depleted. Yet Arctic drilling is controversial -- as Norwegians question whether it’s compatible with fighting climate change -- and there are questions over profitability as renewables increase their share of the energy market.

Norway is holding a parliamentary election on Sept. 11 where opponents of drilling are eyeing a political breakthrough that could help them secure concessions on oil policy. Wintershall’s CEO said public attention around the oil industry was increasing in Norway, but that he expected few changes to framework conditions that are prized by explorers and producers for their stability.

“There’s a consensus across many parties and especially across all that will probably take part in the government that the oil and gas industry is extremely important for Norway, as an employer and for the state budget,” he said. “Norway and the oil and gas industry continue to belong together.”

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