Equinor cashes in on investmentJohan Sverdrup. Source: Lundin Petroleum

Equinor cashes in on investment

Equinor ASA increases its ownership in Johan Sverdrup by 2.6% and sells 16% shares in Lundin Petroleum AS back to Lundin.

Highlights of the transaction:

  • Equinor will sell 16% of the shares in Lundin Petroleum for $1.56bn; Pre-deal, Equinor will hold a stake of 4.9% in the Swedish oil and gas company
  • Equinor will buy 2.6% direct shares in Johan Sverdrup for $910m; Post-transaction, Lundin Petroleum’s stake in the Johan Sverdrup field will be reduced to 20%, while Equinor’s will increase its stake to 42.6%.
  • A contingent payment of up to USD 52 million payable to Lundin in 2025 if Johan Sverdrup proves to be at the upper end or above the indicated resource range of 2.2 – 3.2 bn boe.

Eldar Sætre, Equinor’s President and CEO, said: “Since 2016 we have more than doubled the value of our investment in Lundin. This transaction gives us the opportunity to capitalize on this value creation, and at the same time increase our direct ownership in the Johan Sverdrup field.”

Lundin Petroleum’s Chairman, Ian Lundin said: “The chance to redeem the majority of Equinor’s holding in Lundin Petroleum at a discount to the market and before the pivotal start-up of the Johan Sverdrup development project in November this year was an opportunity which rarely comes along.”

The transaction is expected to be closed by Q4 2019.

Morgan Stanley said the transaction, including the contingency payment, valued Sverdrup at about $11.6/bbl, higher the $10.4 it assumed in its base case. Based on the $910 million Equinor paid for the 2.6% stake, Sverdrup is now valued at $35 billion.

Details regarding the deal can be found here.