Vår Energi offloads stakes in five oil & gas fields for $51 million and DNO’s interest in its operated asset

Norwegian oil and gas player Vår Energi has struck a deal with DNO Norge, a subsidiary of DNO, to divest its interests in five oil and gas fields in the Norwegian Sea for a fixed after-tax consideration of $51 million and the transfer of the latter’s stake in one of Vår Energi’s core hub areas.

Vår Energi, which will sell its interests in the late-life Norne area assets to DNO Norge for $51 million and the latter’s 22.62% stake in the Ringhorne East unit, underlines that this transaction is in line with its stated strategy to dispose of non-core assets to high-grade its portfolio, supporting further growth and long-term value creation in its identified core hub areas.

According to the Norwegian firm, the transaction is expected to improve its unit operating costs and emissions intensity outlook. This deal enables DNO Norge to assume decommissioning liabilities for the acquired fields. While the agreement will be effective from January 1, 2024, the transaction is subject to customary regulatory approvals and is anticipated to close in the third quarter of 2024.

Nick Walker, Vår Energi’s CEO, commented: “Vår Energi is one of the fastest growing E&P companies in the world and is firmly on track to reach production of around 400 thousand barrels of oil equivalent per day by the end of 2025. Following the Neptune transaction our stated plan was to dispose of non-core assets to high grade the portfolio, and we are pleased to have reached an agreement with DNO for the sale of producing field interests in the Norne area and to receive an increased stake in the Ringhorne East unit. This transaction reduces our operating cost and emissions outlook and enhances future value creation.”

Located in the Norwegian Sea, the Norne area includes the Norne (6.9%), Urd (11.5%), Skuld (11.5%), and Marulk (20%) fields along with the Verdande (10.49%) development project. Vår Energi’s net production from the Norne area fields was around 3,000 barrels of oil equivalent per day (boepd) in 2023 and the first quarter of 2024. The firm highlights that the net remaining proved plus probable (2P) reserves for the fields were 7 million barrels of oil equivalent at year-end 2023.

On the other hand, DNO explains that this acquisition will create a new core area for the company as it will hold interests in all producing and fields under development in the greater Norne area, including the Norne hub. Before this deal, the firm had interests in Marulk (17%), Alve (32%), and the ongoing Andvare development (32%).

The Norwegian firm underscores that this transaction will add more than 8 million barrels of oil equivalent (MMboe) in reserves and resources net to the company. In terms of production, the acquisition is estimated to add 3,000 barrels of oil equivalent per day to DNO’s output at closing, rising to above 5,000 boepd in 2026 as the Verdande contribution kicks in.

Having produced over 900 MMboe to date, all fields in the area are tied back to the Equinor-operated FPSO Norne, which came online in 1997. While the produced oil is loaded from the FPSO to tankers for export, the gas is exported by pipeline through the Åsgard Transport System. The Norne license has applied for a lifetime extension until 2036.

Bijan Mossavar-Rahmani, DNO’s Executive Chairman, noted: “This transaction is another step in the rebalancing of our North Sea business on the heels of the acquisition of a 25 percent stake in UK’s Arran field announced in February.”

Recently, Vår Energi changed its timeline for the first oil from the Balder X life extension project in the North Sea offshore Norway, bumping it to the fourth quarter of 2024. This project entails the Balder FPU life extension through a vessel upgrade and the drilling of new wells on the Ringhorne III and Ringhorne IV projects.

The Norwegian player is determined to achieve a 50% emissions reduction on operated fields by 2030 for Scope 1. The company intends to make this happen with the electrification of the Balder/Grane area, Balder area optimization with the FPSO Jotun in production, and the Balder FPU removal.