Aker BP Merger with Lundin Energy
Deal Overview:
Announcement Date: 21 December 2021
Industry: Oil & Gas
Deal Value: $14bn
Deal consideration: transaction agreement
Financial advisor(s): SEB Corporate Finance, Skandinaviska Enskilda Banken AB
Legal advisor(s): Advokatfirmaet BAHR AS (NOR), Hannes Snellman Attorneys Ltd (SWE)
AKER BP DETAILS
Founded: 1971
HQ: Lysaker, Akershus, Norway
Market cap: 106.83B NOK
EV: 125.83B NOK
LTM EBITDA: 3.6B USD
EV/LTM EBITDA: 38.55
Aker BP is an independent E&P company with exploration, development and production activities on the Norwegian Continental Shelf. Aker BP is the operator of Alvheim, Ivar Aasen, Skarv, Valhall, Hod, Ula and Tambar. The company is also a partner in the Johan Sverdrup field. Aker BP is headquartered at Fornebu, Norway, and is listed on the Oslo Stock Exchange under the ticker ‘AKRBP’.
LUNDIN ENERGY DETAILS
Founded: (year) 1981
HQ: (city, country) Stockholm, Sweden
Market cap: 101.02B SEK
EV: 125.45B SEK
LTM EBITDA: -19.2M USD
EV/LTM EBITDA: 33.43
Lundin Energy is an experienced Nordic oil and gas company that explores for, develops and produces resources economically, efficiently and responsibly. They focus of value creation for our shareholders and wider stakeholders through three pillars: Resilience, Sustainability and Growth. Their high quality, low-cost assets mean we are resilient to oil price volatility, and the organic growth strategy, combined with their sustainable approach and commitment to decarbonisation, firmly established their leadership role in a lower carbon energy future. (Nasdaq Stockholm: LUNE).
STRATEGIC RATIONALE
The background to the merger is to unite two highly successful E&P companies which have both been instrumental in the development of the Norwegian continental shelf (NCS) for more than a decade, to instead create the E&P company of the future. The proposed combination has strategic and value accretive benefits, characterised by increased scale, quality and returns. It has the potential to realise operational synergies of up to USD 200M per year, with low operating costs and one of the lowest carbon intensities of any E&P world-wide. Production in 2022 may reach above 400 MBOEPD (Thousand Barrels of Oil Equivalents Per Day) with estimated resources totalling 2.7b barrels of oil equivalent.
RISK
Commodity Price
The company’s revenue is strictly dependent on the annual leverage level achieved by selling hydrocarbons. Consequently, fluctuations in commodity prices may result in significant uncertainty in regards to their operating expenditures as well as competing alternatives (batteries, hydrogen, solar, wind, etc.). Financial instruments and hedging techniques are used to actively manage these fluctuations when being actively traded.
Emerging market trends and incentives — Electric Vehicles and Renewables
Almost 40% of a barrel of oil is used to produce gasoline, whereas an additional great share is used to produce diesel. As such, the oil and gas industry may be heavily impacted by emerging market trends and incentives for the vehicle industry. Electric Vehicles (EV) is projected to be expanding at a CAGR of 21.6% throughout 2021–2028. In December 2021, more than 20 % of new cars sold in Europe were solely electric (BEV).
REFERENCES
https://finance.yahoo.com/quote/AKRBP.OL/key-statistics?p=AKRBP.OL
https://www.crunchbase.com/organization/aker-bp
https://finance.yahoo.com/quote/LUNE.ST/key-statistics?p=LUNE.ST
