Det norske oljeselskap Acquires 7% interest in Jotun from Lundin

This article originates from the news archive of Det norske.

14. March 2008

Det norske oljeselskap ASA (“Det norske”) and Lundin Norway AS (Lundin) has entered into a Sales and Purchase Agreement for a 70% interest in Production License (PL) 103B. The license represents 10% of the Jotun Unit. The Agreement is among others conditional upon approval by the authorities, and the effective date is 1 January 2008.

The consideration is MNOK 72 in cash payment, whereof approximately MNOK 24 for the calculated value of tax balances entitled to tax deductions in the years 2008 to 2013. The consideration is after taxes. The implementation date is expected to be prior to 1 September 2008. The settlement is effected simultaneously with adjustments for revenues and costs subsequent to the effective date. The acquisition will be financed by liquid funds.

ExxonMobil Exploration & Production Norway AS is the Operator of the Jotun Field (Jotun Unit) with a 45% license interest. Other licensees beyond Lundin are Dana Petroleum Norway AS with 45% and Petoro AS with a 3% interest. Through this transaction, Det norske pursues interests identical to those of the licensees in the Jotun Field in case of discovery and subsequent development of the Eitri prospect, which is scheduled for drilling by the drilling facility Bredford Dolphin in Q3 2008.

Through the agreement with ExxonMobil E&P Norway AS Det norske will obtain a 25% license interest in PL 027D after the drilling on the Eitri prospect has been completed and duly reported to the authorities. Det norske also sees additional exploration
potential in PL 103B and PL 027D and seeks to contribute to further maturation of the area in cooperation with the Operator and license partners.

Vice President – Business Development in Det norske, Vidar Bergo Larsen, says that this is a strategically important position for the company.

–  We will contribute to maturing this area in cooperation with the partners. We are of the opinion that Jotun is a good project and also see a  opportunities in the adjacent Eitri prospect. The Agreement gives access to an inexpensive production and drilling facility in an area containing exciting exploration acreage.

In 2006 and 2007 the field produced 665,432 and 514,685 Sm3 of oil and 51,181 and 44,661 million Sm3 of gas, respectively. The Operator’s and the Norwegian Petroleum Directorate’s estimate amounts to 2.7 million Sm3 of oil and 0.1 billion Sm3 gas in remaining reserves in the field as of 31 December 2007. Det norske anticipates a share of production in 2008 equaling approximately 500 barrels per day.

Production of the reserves in Jotun Unit is expected to be maintained to 2015. The floating production vessel Jotun A has been leased to Jotun Unit at a day rate of USD 160,000. When exercising an option in 2010 the day rate will be reduced to USD 140.000 and thereafter reduced annually by USD 5.000 until the day rate is USD 120.000. The Jotun Unit owns the wellhead and drilling installation Jotun B, which subsequent to upgrading may be utilized for prospective new production wells in the field or exploration wells in the area.  In addition, the Jotun Field has revenues from
processing of oil from Ringhorne and Ringhorne Øst.  Det norske has estimated its share of the plugging and abandonment liabilities, which with today’s reserves are expected in 2015/16, at 45 MNOK08.

Read more about the Jotun field here.

About Det norske:
Det norske is the second-largest operating company on the Norwegian Continental Shelf with 23 operatorships and interests in a total of 45 licenses. Last year (2007), the company drilled five exploration wells. Det norske’s scope of activities is limited to the Norwegian Continental Shelf (NCS).

Det norske currently employs a staff of more than 100, and the strong growth rate is expected to continue in 2008. The company`s registered office is located in Trondheim. Headquarter functions are divided between Oslo and Trondheim. The company also has offices in Harstad and Stavanger.

Det norske oljeselskap (“DETNOR”) emerged as a result of the combination between Pertra and DNO`s Norwegian operations. At the end of January 2008, the stock value of the company amounted to NOK billion 3.5.