WOOD Flash – Orlen: to buy KPC’s assets in Norway
Orlen has announced that it is acquiring KUFPEC, the Norwegian subsidiary of Kuwait Petrol Corporation (KPC). KUFPEC owns a stake in five producing assets in which Orlen is also a partner; hence, the deal will increase Orlen’s share of existing properties. It also includes a project that Orlen is not a partner of, but which will be tied into one of Orlen’s fields. The deal will increase the Norwegian reserves by 13%, the total reserves by about 4% and production by about 11%. The acquisition will cost Orlen USD 445m for about 46m BOE of reserves. KUFPEC Norway has cash of about USD 200m, however, so the net cost for Orlen will be USD 245m, or about USD 5/BOE. This is in line with previous acquisitions in Norway by PGNiG, prior to the merger, which ranged from USD 4-6/BOE. The price is similar, despite the strategic value of Norwegian gas increasing in the past two years, along with the gas price. We believe that KUFPEC had few other possible buyers and, for this reason, Orlen was able to obtain an attractive price. We see this as a timely and cost effective way for Orlen to increase its upstream gas production and generate value in the segment, as well as strengthening its downstream gas business.Polski Koncern Naftowy Orlen's activities are divided into three main business segments: the Refining Segment that comprises crude oil processing as well as wholesale and retail trade in refinery products. The Petrochemical Segment that encompasses production and sale of petrochemicals and chemicals. The Retail Segment that comprises of sales at petrol stations. Co.'s basic products include gasolines, diesel oils, light heating oil, Jet fuel, liquid gas, polyetylene, polypropylene, benzene, butadiene, acetone, phenol, glycols, toluen, ortoxylene.
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