Norwegian oil and gas operator DNO is questioning the value of Faroe’s Norwegian asset swap deal with Equinor amid recent hostile takeover attempt it had launched for Faroe.
As reported earlier on Wednesday, Equinor and Faroe Petroleum agreed a number of transactions in the Norwegian Sea and the North Sea region of the Norwegian Continental Shelf, under which Faroe would swap its interests in the Njord, Hyme redevelopment and Bauge development assets in return for interests in four production assets on the Norwegian Continental Shelf: Alve, Marulk, Ringhorne East and Vilje.
These transactions came only ten days after DNO had launched a takeover bid for Faroe, offering 152 pence in cash for each Faroe share, valuing Faroe’s existing issued and to be issued share capital at approximately £607.9 million.
It is important to note that DNO is already a significant shareholder in Faroe Petroleum with a 28.22 percent stake.
Announcing the offer in November, DNO said that Faroe’s assets, the substantial part of which are Norwegian, “are better placed in the bosom of DNO, Norway’s oldest independent oil and gas company.”
Faroe immediately urged its shareholders to take no action in relation to their shares and said that the offer was opportunistic and substantially undervalued Faroe. According to Faroe, the offer also failed to recognize its exciting prospects as an independent business.
Commenting on the deal made between Equinor and Faroe on Wednesday, DNO said: “This is a significant deal for Faroe, and we need to understand it before making a judgment.”
DNO added: “While Faroe has asserted this is not designed to stop the DNO offer, we need to ask if this is good value for a company seeking growth: to swap out of its high quality, large scale, core growth hub, Njord, operated by the national oil company of Norway, Equinor, and to take on instead mature and declining production assets – in a deal with Equinor itself. That is the test this deal needs to satisfy.”
Offshore Energy Today Staff