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Billionaire Investor And Det Norske Owner Browsing For New Oil Assets

Roekke Investor

The owner of Norway’s Det Norske Oljeselkap is looking for new acquisition opportunities, and money is apparently a non-issue. According to Bloomberg, billionaire investor Kjell Inge Roekke is ready to spend a billion if the right asset is put up for sale.

Roekke earlier this year forged a merger between Det Norske and the Norwegian operations of BP, in the latest sign that the time is as ripe as can be for sector consolidation in the country. That merger, which is expected to be completed by the end of this week, will result in a company called Aker BP, which will be 40-percent owned by Roekke via his investment vehicle, Aker ASA, and 30-percent owned by BP.

The merger will add to Det Norske’s daily output of 120,000 barrels of oil equivalent daily, counting BP’s contribution. Without it, the Norwegian buyer is slated to pump an average 62,000-65,000 boepd this year. This, by the way, is an upward revision on a previous guidance of 55,000-60,000 boepd.

Det Norske’s chief executive Karl Johnny Hersvik told Bloomberg that Aker is looking for quality assets, it is not just ready to splash a billion dollars on anything. “To pay $1 billion for an asset that’s not attractive is of course a problem, but the amount itself is not necessarily a problem. “That depends on the asset,” he said.

Right now, Exxon and Total are looking to sell assets in Norway, which may qualify as good-quality for Aker, but Hersvik did not go into specific detail about potential acquisition targets in his interview with Bloomberg.

It seems Det Norske’s strategy involves using acquisitions to not just expand its asset portfolio, but also to bring down production costs. As Hersvik said earlier this month, the company looked for assets that offered a breakeven level of US$35 per barrel, all-in. At the same time, Det Norske would continue to grow organically, the CEO said, aiming for a 50-percent cost cut in engineering expenses per platform, simultaneously reducing execution time by a quarter.

By Irina Slav for Oilprice.com

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