Vår Energi ASA to sell Norne area assets to DNO Norge AS for $51m
In a strategic move to streamline its asset portfolio and focus on core operations, Vår Energi ASA has agreed to sell its late-life assets in the Norne area to DNO Norge AS. The deal, valued at a fixed after-tax consideration of USD 51 million, also includes an asset swap where Vår Energi will acquire DNO Norge’s stake in the Ringhorne East unit.
Transaction Details and Strategic Rationale
The transaction aligns with Vår Energi’s strategy to divest non-core assets, thereby improving its operational efficiency and reducing emissions intensity. This decision comes as part of the company’s broader plan to focus on high-value core areas, supporting sustainable growth and value creation. Nick Walker, CEO of Vår Energi, commented on the transaction, “Following the Neptune transaction, our 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.”
Asset Overview and Production Impact
The assets involved in the sale include the Norne (6.9%), Urd (11.5%), Skuld (11.5%), and Marulk (20%) fields, along with the Verdande (10.49%) development project, located in the Norwegian Sea. Vår Energi’s net production from these fields was approximately three thousand barrels of oil equivalent per day in 2023 and the first quarter of 2024, with remaining proved plus probable (2P) reserves estimated at 7 million barrels of oil equivalent at the end of 2023.
The transaction is set to enhance Vår Energi’s unit operating costs and emissions outlook, aligning with its strategy of optimizing portfolio efficiency and focusing on core operational areas. It also positions the company to reach its production target of around 400 thousand barrels of oil equivalent per day by the end of 2025.
Vår Energi enlisted Houlihan Lokey as the exclusive financial advisor and Advokatfirmaet Schjødt as the legal advisor for this transaction.
Scheduled to be effective from January 1, 2024, and subject to customary regulatory approvals, the transaction is expected to close in the third quarter of 2024. It does not impact Vår Energi’s previously announced production guidance for 2024, year-end 2025, and beyond. This strategic divestiture marks a significant step in Vår Energi’s ongoing efforts to refine its asset portfolio and strengthen its market position in the energy sector.
The sale of the Norne area assets is a calculated step by Vår Energi to concentrate on more profitable, core business areas, reducing overhead and enhancing operational effectiveness. This move is reflective of broader trends in the energy sector where companies are increasingly focusing on optimizing asset portfolios to adapt to market conditions and regulatory environments.