Norwegian firm quadrupling its North Sea oil & gas production with Sval Energi buy

Norwegian oil and gas operator DNO has set the wheels into motion to augment its hydrocarbon portfolio with the acquisition of Sval Energi, a compatriot company. This move is anticipated to add scale and diversification to solidify the firm’s position among key European independent oil and gas players.

DNO’s agreement to acquire 100% of the shares of Sval Energi Group from HitecVision comes with a cash consideration of $450 million based on an enterprise value of $1.6 billion. The Norwegian operator sees Sval Energi’s assets as complementary to its North Sea portfolio. The company plans to finance the acquisition from existing liquidity, including available credit facilities, and will set in place the optimal capital structure before completion.

“This is a rare opportunity to acquire a portfolio of high-quality oil and gas assets on the Norwegian Continental Shelf, and we have moved fast to capture it,” highlighted Bijan Mossavar-Rahmani, DNO’s Executive Chairman, adding: “Given low unit production costs and limited near-term investment requirements, the Sval Energi portfolio is highly cash generative and will help underpin development of the numerous discoveries we have made in Norway recently.”

According to DNO, this transaction will boost its global net production by two-thirds to around 140,000 barrels of oil equivalent per day (boepd) on a 2024 pro forma basis and proven and probable (2P) reserves by 50% to 423 million barrels of oil equivalent (boe). It will also increase North Sea 2P reserves from 48 million boe to 189 million boe post-closing and 2C resources from 144 million boe to 246 million boe.

Moreover, the Norwegian player claims that this acquisition will quadruple North Sea production to around 80,000 boepd, propelling the company to the upper ranks of Norwegian Continental Shelf (NCS) players and turning the North Sea into the biggest contributor to the firm’s net production with some 60% of the total, with the balance coming predominantly from two operated fields in the Kurdistan region of Iraq.

DNO underlines that the Sval Energi addition to its portfolio will provide tax synergies, G&A savings, and lower borrowing costs while strengthening its presence in core areas on the Norwegian Continental Shelf where the firm has seen exploration success since 2020 with 14 discoveries, including Bergknapp/Åre, Bergknapp, Carmen, Cuvette, Heisenberg, Kveikje, Mistral, Norma, Ofelia, Othello, Overly, Ringand, Røver Nord and Røver Sør, together adding contingent resources (2C) of around 100 million boe net to the firm.

The Norwegian player has also emphasized its intention to capitalize on Sval Energi’s extensive portfolio, encompassing interests in hubs and existing tie-backs that provide potential development synergies with these hydrocarbon discoveries. Sval Energi has non-operated interests in 16 producing fields offshore Norway, with a net production of 64,100 boepd in 2024.

The effective date of the transaction is January 1, 2025, with expected completion mid-year 2025, subject to customary regulatory approvals from the Norwegian Ministry of Energy, the Norwegian Ministry of Finance, and competition authorities. Pareto Securities is acting as a financial advisor to DNO and Advokatfirmaet Thommessen as its legal counsel.

Furthermore, Sval Energi’s largest assets by net 2P reserves are Nova, Martin Linge, Kvitebjørn, Eldfisk, Maria, Symra, and Ekofisk, enabling additional upside and production potential from organic growth in producing assets, fields under development – Maria revitalization, Symra, Dvalin North – and discoveries – Cerisa, Ringhorne North, and Beta – as well as redevelopment opportunities, such as Albuskjell and West Ekofisk.

However, the MLK wind farm, which will be carved out before closing, is not part of the transaction, but a team of 93 employees is set to be integrated into the DNO organization. This acquisition follows the arrangements made with OKEA to exchange partial stakes in two assets off the coast of Norway.