Norwegian oil and gas operator DNO has revealed its plans to acquire a stake of 71.78% which it previously didn’t own in Faroe Petroleum in a deal worth around £607.9m ($779.8m).
DNO already owns a stake of 28.22% in Faroe Petroleum, which is currently focused on carrying out exploration, appraisal and production activities in Norway and the UK.
As per the offer, DNO is looking to pay 152 pence in cash for each of the shares of the UK-based oil and gas company it did not own before. The transaction values the existing issued and to be issued share capital of Faroe Petroleum at around £607.9m.
DNO said that it strongly believes that the assets of the UK oil and gas firm are better positioned under its control. A substantial part of Faroe Petroleum’s assets is in Norway.
The Norwegian firm said that its current operating gross production is 125,000 barrels per day whereas Faroe Petroleum has 7,500 barrels of oil equivalent a day of gross production from assets operated by it.
It further said that its proven and probable reserves were almost four times more than those of the UK firm as reported at 31 December 2017.
In April 2018, DNO signed a deal to acquire 15.37% stake in Faroe Petroleum from Delek Group and through other transactions, nearly doubled it in the same month.
Prior to that in 2017, DNO made a comeback in the North Sea upstream sector with the acquisition of Origo Exploration.
DNO executive chairman Bijan Mossavar-Rahmani said: “We are pleased now to engage directly with the Faroe shareholders with a proposed all-cash voluntary offer of 152 pence per share which represents a premium of 44.8 percent to the closing price of 105 pence on the day before DNO announced its first acquisition of Faroe shares last April, and a premium of 20.8 percent to the closing price of 125.8 pence last Friday.
“In the period between our first acquisition, triggering significant bid speculation, and this offer, the price of Brent crude has dropped 13 percent and oil and equity markets have entered a period of great uncertainty.”
Last week, Faroe Petroleum, through the drilling of wildcat well 30/6-30 in the Norwegian North Sea, made a minor gas/condensate discovery in production license 825, near the Oseberg field.