E.ON Sells Norway Oil, Gas Assets To Russian Billionaire

E.ON Sells Norway Oil, Gas Assets To Russian Billionaire
E.ON agrees to sell its Norwegian oil and gas business to Russian billionaire Mikhail Fridman in a deal worth $1.6 billion.


FRANKFURT, Oct 14 (Reuters) - E.ON is selling its Norwegian oil and gas assets to Russian billionaire Mikhail Fridman in a deal worth $1.6 billion as Germany's biggest utility continues to shed assets under a restructuring plan.

As part of its major overhaul, E.ON put its North Sea oil and gas exploration and production activities (E&P) under review, hoping to rake in proceeds from a business where it lacks the critical mass to compete with large oil companies.

"The successful sale of our E&P business in Norway is a landmark transaction in the sector," Michael Sen, E.ON's Chief Financial Officer, said in a statement.

Under its restructuring plan, E.ON will spin off its energy trading, oil and gas activities and most of its power generation next year into a new company called Uniper.

Fridman's LetterOne fund emerged as the frontrunner to buy E.ON's Norwegian North Sea assets after the Russian was forced to sell his British North Sea assets as a result of Western sanctions over the Ukraine crisis.

E.ON E&P Norge has stakes in 43 licences but most are exploration assets, only a handful are in production and none is operated by E.ON. Its main production fields include Njord, operated by Statoil and Skarv, operated by BP.

Shares in E.ON turned positive after the sale news and were up 2.6 percent at 1111 GMT, leading the German blue-chip index higher.

The purchase by LetterOne, whose energy fund is headed by former BP boss John Browne, signals a push by the Russian oligarch to expand his fund's oil and gas portfolio.

"This acquisition in Norway is a perfect fit to our renewed business strategy," said Thomas Rappuhn, CEO of DEA Deutsche Erdoel AG, which LetterOne bought from E.ON's German peer RWE earlier this year.

Rappuhn said the company would look for further acquisitions in Europe and North Africa.

The deal, which is subject to the regulatory approval of Norwegian authorities and the European Commission, is expected to close by the end of the year, a spokesman for E.ON said.

Norway's oil minister said he welcomed the fact international companies were interested in investing in the country, adding that the application for approval of the deal would be handled "the usual way".

E.ON said its UK E&P business remains under review, adding it would "provide an update in due course". E.ON's Norwegian E&P business had output of 16.35 million barrels of oil equivalents (mboe) in 2014. The UK unit's output stood at 6.02 mboe.

(Additional reporting by Maria Sheahan and Balazs Koranyi; editing by Georgina Prodhan and David Clarke)


Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.