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BP Closes Det norske, Aker Merger to Form New Entity

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Oil giant BP plc (BP - Free Report) has recently completed its earlier announced merger with Det norske oljeselskap and the latter’s shareholder, Aker ASA. The transaction has an effective date of Sep 30, 2016.

The merger led to the creation of a new entity – Aker BP ASA. It will combine the assets as well as expertise of both the companies’ Norwegian exploration and production operations. Per the terms of the proposed transaction, Aker BP will be operated independently. It will also be listed on the Oslo Stock Exchange.

As part of the deal, which was announced in Jun 2016, Det norske would issue 135.1 million shares based on NOK 80 per share to BP as compensation for all shares in BP Norge. This includes assets, a tax loss carry forward of $267 million and a net cash position of $178 million.

Shareholders of Aker BP will be current Det norske stakeholder Aker, other Det norske shareholders and BP, with 40%, 30% and 30%, respectively. BP is also entitled to collect a cash payment of $140 million and positive working capital adjustments as part of the transaction.

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Following the merger, Aker BP will hold a portfolio of 97 licenses on the Norwegian Continental Shelf. Of these, 46 are already in operation. The combined company is estimated to hold 723 million barrels of oil equivalent P50 reserves, with a 2015 joint production of about 122,000 barrels of oil equivalent per day. In 2015, Det norske had a net average production of 60,000 barrels of oil equivalent per day.

On completion of the transaction, BP’s Norway’s unit workforce of about 850 will be employed at the combined organization.

The combination of the Norwegian asset portfolios of the two energy behemoths will prove to be immensely beneficial for Aker BP. The new entity will gain from Det norske’s efficient, streamlined operating model as well as BP’s extensive experience in Norwegian offshore operations, asset knowledge, technical expertise and international exposure.
By the early 2020s, this new Norwegian energy firm is estimated to grow production to over 250,000 barrels of oil equivalent per day.

BP is one of the world's major energy companies that provides its customers with fuel for transportation, energy for heat and light, retail services and petrochemical products.

BP currently carries a Zacks Rank #3 (Hold). Some better-ranked players from the energy sector include Chevron Corporation (CVX - Free Report) , NGL Energy Partners LP (NGL - Free Report) and Evolution Petroleum Corp. (EPM - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Chevron posted a positive earnings surprise of 54.84% in the preceding quarter.

NGL Energy Partners has a mixed earnings surprise history. The partnership posted positive earnings surprise in two of the last four quarters. It reported a positive earnings surprise of 1480.0% in the preceding quarter.

In the last reported quarter, Evolution Petroleum Corp. delivered a positive earnings surprise of 350.00%. Coming to the earnings surprise history, the company beat estimates in two of the last four quarters.

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