DNO ASA said Thursday it had signed offtake agreements with Exxon Mobil Corp and Shell PLC for the entirety of its North Sea oil production and secured up to $410 million in “related offtake financing facilities”.
“The agreement with ExxonMobil Asia Pacific Pte Ltd, covering around half of DNO’s North Sea oil output, has a tenor of two years and a related revolving credit facility of up to $185 million”, the Norwegian oil and gas explorer and producer said in an online statement.
“The agreement with Shell Trading and Shipping Co Ltd, covering the other half of the output, has an initial tenor of one year and a related prepayment facility with a European bank of up to $225 million”.
DNO executive chair Bijan Mossavar-Rahmani said, “The offtake agreements with ExxonMobil and Shell unlock considerable financing at very attractive rates, creating opportunities for continued growth in nervous markets”.
DNO said it has now “put into place financing facilities of up to $910 million tied to its North Sea oil and gas production”.
It earlier secured up to $500 million in financing from a United States bank related to an offtake agreement with French power and gas utility ENGIE SA for 100 percent of its Norwegian production.
“These three-way transactions are made possible because buyers are eager to lock in secure supplies of Norwegian oil and gas and U.S. banks, in particular, have significantly stepped up fossil fuel lending”, Mossavar-Rahmani said in a statement July 2.
DNO said of the ENGIE-tied financing, “Proceeds from the offtake financing facility will be used to replace Sval Energi’s similar existing facilities as well as for general corporate purposes”.
In the second quarter, DNO completed its $450 million acquisition of Sval Energi Group AS from HitecVision.
“The acquired portfolio comprises 16 producing fields in Norway, quadrupling DNO’s North Sea production to 80,000 barrels of oil equivalent per day”, DNO said June 12. “The company’s North Sea proven and probable reserves swell to 189 million barrels of oil equivalent (MMboe), also a fourfold increase. Contingent resources total 316 MMboe.
“Following the acquisition, Norway and the United Kingdom represent nearly 60 percent of the company’s global production and about 45 percent of its global reserves, with the balance predominantly in the Kurdistan region of Iraq”.
DNO added, “Supported by ongoing field development projects with multiple discoveries currently being matured for project sanction, DNO is well placed to grow North Sea production organically in the years ahead. The combined North Sea 2P reserves and 2C resources equal 15 years of production at the current run rate”.
To contact the author, email jov.onsat@rigzone.com
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