Aker BP has agreed to buy Hess Norge, which includes major stakes in the Valhall and Hod fields, from Hess for US$2 billion as the US oil firm continues an offshore asset sale.
Yesterday, Kosmos Energy said it had agreed to acquire Hess' 85% stake in two long-producing oil fields, Cieba and Okume, in Equatorial Guinea for $650 million. Announcing the deal with Aker BP, Hess said it is now also moving to sell its Danish assets, comprising a 61.5% stake in the South Arne field.
Through today's sale, Aker BP - will become the sole owner of the Valhall and Hod fields, taking on Hess’ 64.05% and 62.5% stakes, respectively.
Hess CEO John Hess said: “Proceeds from these asset sales, along with cash on the balance sheet, will prefund development of our world class investment opportunity in offshore Guyana, where we have participated in one of the world’s largest oil discoveries of the past decade [the Liza discovery]."
Aker BP says the move will strengthen its position on the Norwegian Continental Shelf, increasing production and reserves “significantly,” with an estimated proven and probable (2P) reserves of 150 MMboe and best estimate 2C contingent resources of 195 MMboe.
Aker BP is planning to submit a plan for development and operation for the Valhall Flank West project in late 2017, with estimated first oil in 2020. In addition, Aker BP is maturing a number of additional projects in the area, including the North and South Flank projects.
Early January 2017, Valhall and Hod passed 1 billion boe produced, which is more than three times the volume expected at the opening of the field in 1982. “The ambition is to produce a further 500 MMboe,” says Aker BP.
Aker BP CEO Karl Johnny Hersvik says: “Aker BP has a clear ambition to be the leading independent offshore E&P company. This transaction is an important step in that direction. Taking full ownership and control allows Aker BP to pursue upsides more aggressively.”
However, the firm says it will seek to sell or swap a minority interest in the fields to partners who want to work with Aker BP to target upside potential in the area.
During the first nine months of 2017, Hess Norge’s share of production from the Valhall and Hod fields was about 24,000 boe/d.
The Valhall field center consists of six separate steel platforms for living quarters, drilling, production, water injection, and a combined process- and hotel platform. Two unmanned and remotely operated flank platforms (North and South) sit about 6km north and south of the field center.
The Hod field is developed with an unmanned wellhead platform, 13km south of Valhall, and is remotely operated from the Valhall field center. All wells on the Hod platform are currently shut-in and awaiting plugging and abandonment. The Hod reservoir is now being produced from wells drilled from the Valhall South Flank platform.
Hess Norge today has 19 staff. Board members are Johan Nic Vold (chair), Anders Nymann, Brian Truelove, Martin Edwards, Helena Deal and Gerbert Schoonman. Edwards is also managing director. The deal is expected to close by the end of the year.
Hess' sales process relating to its Danish assets is expected to be completed in 2018. The South Arne field produced an average 11,000 boe/d net to Hess in 1H 2017.
Image: Valhall.
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