Equinor Buys Chevron's 40% Stake in Major U.K. Oil Field

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GALWAY, IRELAND--October 9, 2018--Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Norway's Equinor (NYSE:EQNR) (Stavanger, Norway), formerly Statoil, has agreed to purchase Chevron's (NYSE:CVX) (San Ramon, California) 40% stake in the Rosebank oilfield west of Scotland's Shetland Islands for an undisclosed sum.

Rosebank, which lies about 130 kilometres (km) northwest of the Shetland Islands, is one of the largest undeveloped oil and gas fields on the U.K. Continental Shelf (UKCS) and is estimated to hold more than 300 million barrels. The deal raises hopes that the delayed project might get underway in the coming year. Consultancy firm Wood Mackenzie said that the complex project will cost roughly $6 billion to fund.

"Today's agreement allows us to buy back into an asset in which we previously had a participating interest, demonstrating our strategy of creating value through oil price cycles," explained Al Cook, Equinor's executive vice president for global strategy & business development and U.K. country manager. "The acquisition of Rosebank complements our portfolio of oil, gas and wind assets in this country, in line with our strategy as a broad energy company. This new investment underlines Equinor's commitment to be a reliable, secure energy partner for the U.K."

The other partners in the field are Suncor Energy (40%) and Siccar Point Energy (20%). Hedda Felin, Equinor's senior vice president for U.K. & Ireland offshore commented: "With Rosebank, a standalone development in the underexplored West of Shetland region, we strengthen our upstream portfolio, which also includes Mariner, one of the largest investments on the UKCS in over a decade. As we have done with other projects in our portfolio, such as Johan Castberg and Bay du Nord, we intend to leverage our experience and competence to create further value in Rosebank, in alignment with the U.K. government's priority of maximising the economic recovery of the UKCS."

Chevron's stake sale marks its continued withdrawal from the North Sea. In July, the company announced plans to sell its U.K. Central North Sea fields including the Alba, Alder, Britannia (and satellites), Captain, Elgin/Franklin, Erskine, and Jade fields.

Following the Rosebank stake sale, Kevin Swann, analyst from Wood Mackenzie's Europe upstream research team said: "Those with long memories will recall that Statoil, as Equinor was then, sold its original interest in Rosebank to OMV in 2013 at a commanding price. With this deal, Equinor is returning at a good time in the industry cycle. We believe this deal is good for the project, the other partners in the project, and the U.K. upstream sector. Equinor can come in and move this project forward."

He added: "Rosebank has been an on-off affair for Chevron since it was discovered in 2004. The U.S. major had been weighing up development options for a number of years, but hadn't made a final investment decision. Rosebank may have may be struggling to compete for capital within Chevron's low-breakeven tight-oil portfolio. "Selling its stake in Rosebank to Equinor could spell the end for Chevron in the U.K. and Europe. It has already moved on from Norway and Denmark, and is looking to offload its U.K. North Sea assets. If all the sales go through, it would leave Clair as its only U.K. asset--the 19.42% stake is valuable, but may not be enough for Chevron to retain a U.K. presence."

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