DEA expands with $1.6bn Norway deal
Hamburg-based DEA, said on 14 October it will pay $1.6bn to German utility E.ON for its Norwegian upstream business
Three days earlier, DEA agreed to divest its UK upstream subsidiary to chemicals producer and UK shale gas explorer Ineos for some $750m, just ahead of a deadline set six months ago by the UK government.
DEA's Norwegian acquisition from E.ON will add 45,000 barrels of oil equivalent/day (boe/d) through minority stakes in three fields: Skarv (28%), Njord (30%) and Hyme (17.5%) - balanced between oil and gas - plus stakes in the Snilehorn, Snadd and Fogelberg discoveries. In all, DEA will acquire equity in 43 licenses from E.ON, plus $100m cash on the balance sheet as of 1 January 2015. The deal will more than double its Norwegian equity production to 75,000 boe/d, as DEA already has stakes in the Snorre, Gjoa, Knarr and other producing fields.
DEA, which produces in Germany, Norway, Denmark and Egypt and is a partner in the Repsol-led Reggane Nord gas development in Algeria, had 2014 equity production of 103,400 boe/d. This is set to grow this year as its UK sale - about 10% of DEA production last year - will be more than offset by the new Norwegian assets.
Ineos said that the DEA UK assets, which it agreed to buy on 11 October, would provide up to 8% – some 3bn m³/year – of the country’s gas production. DEA owns stakes in the Breagh (70%) and Clipper South (50%) fields. In April, London said it would revoke DEA UK's licenses, unless divested by October. It feared that new EU sanctions against Russia might force the shut-in of UK gas production, as happened in 2010 with the partly Iranian-owned Rhum UK gas field.
E.ON said that, following its exit from Norway, its UK upstream business "remains under strategic review" although it will retain its Russian assets. Other utilities like Centrica, Engie and Dong are weighing up possible North Sea divestments too.