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Equinor (EQNR), Faroe Swap Assets to Rebalance Portfolio

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Equinor ASA (EQNR - Free Report) and Faroe Petroleum have agreed to swap stakes in several oil fields in Norway.

Faroe’s equity in the Njord, Hyme and Bauge developments will be traded for Equinor’s stakes in the producing Alve, Marulk, Ringhorne East and Vilje fields. The deal does not involve any cash consideration.

The swap has provided Faroe, which is resisting a takeover effort from DNO, a better balance between production and development assets. The swap will boost output in Faroe’s portfolio by 7,000-8,000 barrels of oil equivalent (boe) per day in 2019.

The Njord field was in production from 1997 to 2016 and is expected to restart in 2020 and will operate till 2040. The platform and the storage vessel are undergoing extensive upgrade. Hyme is a tie-back to Njord and was shut due to the removal of Njord A. In 2017, Bauge’s PDO was approved and will be tied back to Njord by means of a subsea template.

The reserves remaining at the Njord and Hyme fields are projected to be 175 million barrels of oil equivalent (mmboe), while reserves at Bauge are estimated at 73 mmboe. In 2019, exploration and development wells are proposed for Alve and Marulk.

Faroe announced that the Cassidy exploration well, operated by Spirit Energy in the Norwegian North Sea, has commenced drilling. The transactions closure, subject to government approval, is effective Jan 1, 2019.

The transaction is in sync with Equinor’s strategy to upgrade portfolio and focus on development of Norwegian Continental Shelf (NCS). The enhanced stake in Njord, Hyme and Bauge developments, which are projected to have significant upside potential will further strengthen reserve base. Statoil’s exit from non-core assets and broadening of international asset base look promising.

Zacks Rank & Key Picks

Currently, Equinor carries a Zacks Rank #3 (Hold).

A few better-ranked players in the same sector are Eni SpA (E - Free Report) , Enterprise Products Partners L.P. (EPD - Free Report) and SunCoke Energy, Inc (SXC - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Rome-based Eni is among the leading integrated energy players in the world. The company delivered an average positive earnings surprise of 16.7% in the last four quarters.

Headquartered in Houston, TX, Enterprise Products Partners is among the leading midstream energy players in North America. It pulled off an average positive earnings surprise of 9.3% in the last four quarters.

SunCoke acquires, owns and operates the coke making and coal mining operations. The company delivered an average positive earnings surprise of 302.6% in the last four quarters.

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