January 24, 2022

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Aker BP buys Lundin parts in giant deal for 125 billion – E24

Aker BP buys Lundin’s oil and gas business in an agreement worth NOK 125 billion and at the same time puts the Lundin family on the side of the owner. The combined company would be the second largest after Equinor on the Norwegian shelf.

Kjell Inge Røkkes Aker is the dominant owner of Aker BP.

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Aker BP has taken over the oil and gas business of Sweden’s Lundin Energy in what is described as a merger agreement worth NOK 125 billion.

looks from one stock market announcement From Aker BP on Tuesday afternoon.

According to the announcement, the merger will create the largest listed oil company, which is based exclusively on the Norwegian continental shelf.

The company will continue to be headquartered in Fornebu outside of Oslo, and Karl-Johnny Hirsvik will continue to head the company.

The combined market capitalization of the two companies will be $20.4 billion (183 billion kronor), according to Aker BP.

Barreto analyst Tom Eric Christiansen believes the agreement is good for both parties and believes the new giant will be attractive to international investors.

Aker BP CEO, Karl Jonny Hrsvik.

Today, the vision has become a reality

– We know the Lundin Corporation well, and we are convinced that together we will create a better Aker BP, says Karl Johnny Hersvik, CEO of Aker BP, in message.

Trading in the two companies stopped due to the announcement. After trading resumed, Aker BP shares closed more than 6 percent higher, at NOK 309.2.

– In 2016, we created Aker BP with BP when we merged Det norske and BP Norge. We then shared a vision for the subsequent acquisition of Lundin Energy, Chairman Øyvind Eriksen at Aker BP says according to the announcement.

Today, the vision has become a reality. We are grateful for the relationship with BP and their significant contribution to the success of Aker BP. We now welcome the Lundin family (through Nemesia) as co-shareholders in Aker BP, he says.

On a conference call, Eriksen explains:

-This is a deal we not only dream of often, but which investment banks and analysts have repeatedly encouraged us to pursue. It is not difficult to understand why. Lundin Energy is a wonderful company with major, visionary shareholders.

– I was told that this is the largest stock exchange deal in Norway in 15 years, adds Eriksen.

Øyvind Eriksen is the Chairman of Aker BP and CEO of Kjell Inge Røkkes Aker.

This is how property is distributed

Following the merger, the new Aker BP will own Kjell Inge Røkkes Aker with 21.2 percent, BP with 15.9 percent and Lundin’s Luxembourg-based subsidiary Nemesia S.á.rl with 14.4 percent.

According to the announcement, other shareholders of the former Aker BP and Lundin Energy will own 48.6 percent of the shares in the new Aker BP.

The transaction was settled in the form of US$2.22 billion (19.94 billion NOK) in cash and 271.91 million new shares to be issued by Aker BP and distributed to shareholders of Lundin Energy AB.

Specifically, Lundin owners get $7.76 each. He participated in addition to 0.95 shares of Aker BP PR. Lundin Oil and Gas Business. They also hold their shares in Lundin Energy AB, which will remain.

Aker, BP and Nemesia pledge not to sell their shares within the first six months after completion of the transaction. According to the plan, this will take place in the second quarter of 2022, subject to the approval of the general meetings of companies and entities.

will increase the return

Aker BP presents several arguments for the transaction, including:

  • Increase the ability to distribute profits
  • Opportunity to achieve annual cost synergies of up to $200 million
  • Total resource base 2.7 billion barrels of oil equivalent, with significant growth potential
  • Production in 2022 is estimated at more than 400,000 barrels per day.

Aker BP announced Tuesday that the company will increase its quarterly dividend by 14 percent to $0.475 per share. Share from January.

“It is also proposed that the combined company continue to pay these increased dividends, and it has the ambition to increase this distribution by at least five percent annually from 2023 with oil prices above $40 per barrel,” Aker BP wrote.

Reputation questions

During today’s conference call, a participant, who presented himself as a shareholder in Lundin Energy, asked how Aker BP considered this merger to affect the company’s reputation, given the allegations against Lundin about alleged abuses in Sudan.

Nick Walker, Lundin Energy’s CEO, noted that the company rejects the allegations and does not expect to receive a fine in the case. Eriksen noted that the case was not about Lundin Energy’s operations on the Norwegian shelf, and that he instead expected the merger to bolster Aker BP’s reputation.

The caller also accused Lundin Energy of stripping the company of valuables through the sale of assets, and that there was only one empty shell unable to pay any fine in the case. Walker rejected this and noted that the remaining Lundin Energy would be a profitable debt-free renewable company with growth opportunities.

These are the assets of the company

Following the merger, the new Aker BP will have, among other things, a 31.6 percent ownership stake in the Johan Sverdrup field in the North Sea, of which Equinor owns 42 percent and is the operator.

The combined company will also own these holdings:

  • Valhal area: 90 percent ownership
  • Edvard Gregg District: 65% ownership
  • Scarf District: 24-30 percent ownership
  • Alfheim Region: 47-80 percent ownership
  • Ivar Asen: 36 percent
  • Al-Ula region: 15-80 percent

Correction: In an earlier version of this case, the company’s estimated production was set at 400 million barrels per day in 2022. The correct production is 400,000 barrels per day in 2022. This was changed at 22.10 on December 21, 2021.

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