Statoil ASA’s share price down, to sell a 15.5% stake in the Shah Deniz field to Petroliam Nasional Bhd in a deal estimated to $2.25 billion

The largest energy company in Norway – Statoil ASA announced in an official statement that it intends to dispose of its 15.5% stake in the Shah Deniz field in Azerbaijan. The company, whose production from the field in question over the second fiscal quarter amounted to 38 000 barrels of oil on a daily basis, will sell the stake to Petroliam Nasional Bhd in a deal estimated to $2.25 billion.

The Executive Vice President for development and production international – Mr. Lars Christian Bacher said in the companys statement, cited by Bloomberg: “The divestment optimizes our portfolio and strengthens our financial flexibility to prioritize industrial development and high-value growth.”

According to the terms of the deal, the transaction is to include sales of Statiols 15.5% participating interest in the Shah Deniz production-sharing agreement, its 15.5% share in the South Caucasus Pipeline Co. and the holding company, and its 12.4 percent stake in the Azerbaijan Gas Supply Co. The deal is expected to be finalized in early 2015. In addition, as Statoil explained, the transaction must be approved by regulatory authorities.

The Shah Deniz field is managed by BP Plc by 28.8%, and other partners, including TPAO with 19%, SOCAR with 16.7%, Lukoil at 10 and Nico 10%.

Norway-based Statoil narrowed its targets for production growth, while its plans for investments were also reduced.

Teodor Sveen Nilsen, an analyst at Swedbank, commented on the companys statement, as reported by Reuters: “(The) Shah Deniz divestment is yet another sign of credible strategy, (and is) positive. This is yet another sign of Statoil’s priority of value over volume, focus on ROACE (return on average capital employed), cash flow and dividend capacity.”

Statoil ASA lost 0.13% to trade at NOK 158.10 per share by 8:22 GMT, marking a one year increase of 17.02%. The company is valued at NOK 504.76 billion. According to the Financial Times, the 33 analysts offering 12 month price targets for Statoil ASA have a median target of NOK 185.00, with a high estimate of NOK 220.00 and a low estimate of NOK 120.00. The median estimate represents a 16.87% increase from the last price of NOK 158.30.