Statoil ASA, Norway’s biggest oil company, agreed to buy Brigham Exploration Co. for about $4.4 billion in cash, expanding in unconventional U.S. assets because of declining North Sea production.
Statoil will buy all of Brigham’s shares for $36.50 each, a 20 percent premium on the Oct. 14 closing price, the Stavanger- based company said. It would be the seventh-largest takeover announced in the oil and energy industry this year. The premium compares with a 23 percent average this year in the industry, Bloomberg calculations show.
By buying Brigham, Statoil will join U.S. competitors ConocoPhillips and Exxon Mobil Corp. among the top 10 holders of acreage in the Bakken shale, according to Bloomberg Industries. The 200,000 square-mile (518,000 square kilometers) geological formation, centered on the Midwestern state of North Dakota, may eventually produce as much as 2 million barrels of oil a day from 400,000 barrels a day last year, according to local producers.
“By entering the Bakken and Three Forks we get immediate operatorship,” Statoil Chief Executive Officer Helge Lund said in a telephone interview. “It’s important for us to position ourselves in the best unconventional areas and all the areas we’re in now have very competitive cost levels.”
Government-controlled Statoil, which operates about 80 percent of Norway’s petroleum production, is expanding in unconventional gas, harsh-environment and deepwater areas abroad such as Brazil, Angola and the U.S. Gulf of Mexico to boost production. Norway’s oil production has slumped 50 percent since 2000 and Statoil missed output targets last year.
The company in 2008 entered U.S. shale gas resources by acquiring $3.38 billion in assets from Chesapeake Energy Corp. and in June bought Eagle Ford shale acreage from SM Energy Co. for $225 million with Talisman Energy Inc.
“I like it strategically,” Carl Christian Bachke, an analyst at RS Platou Markets AS with a “buy” recommendation, said by phone. “They are now heavily involved in Marcellus, Eagle Ford and Bakken. That’s the place you want to be in the U.S. onshore and this is the last piece of that puzzle.”
Brigham, based in Austin, Texas, has more than 100 employees in Austin and North Dakota and a “strong position” in the Bakken and Three Forks tight oil areas in North Dakota and Montana, Statoil said.
Statoil fell as much as 1.4 percent and was down 0.7 percent to 137.2 kroner as of 12:19 a.m. in Oslo trading.
The deal will give Statoil more than 375,000 net acres in the Williston Basin, where the Bakken and Three Forks are located. Brigham also holds interests in 40,000 net acres in other areas. Statoil said the risked resource base is estimated at 300 million to 500 million barrels of oil equivalent equity.
Equity production is now at about 21,000 barrels of oil equivalent a day, and has potential to increase to 60,000 barrels to 100,000 barrels a day over a five-year period, Statoil said.
“Over the course of the past months we’ve announced transactions for approximately $10 billion,” Lund said, including sales of assets in Canada and Brazil. “We’re implementing our plans to be active on the portfolio side and streamline the company according to the growth strategy we’ve laid out.”
The acquistion is expected to close in the first quarter, Statoil said. The company was advised by Tudor, Pickering, Holt & Co. Securities, Inc. and Goldman Sachs Group Inc. Vinson & Elkins LLP is the legal adviser.
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