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Hydro's oil and gas activities to merge with Statoil

Source: www.gulfoilandgas.com 12/18/2006, Location: Europe

Shares in Statoil ASA and Norsk Hydro ASA soared Monday as the companies announced they have recommended a merger of their oil and gas activities to shareholders, which would create the world's largest offshore operator.

The combined market value of the new company would be around 577 million Norwegian kroner, or some $92.7 billion, as of Monday morning. Norsk Hydro shares opened 25% higher than the close of trading Friday at NOK196, while Statoil rose 5.2% to NOK182.25.

The merged company would have combined production of 1.9 million barrels a day in 2007 and a proven reserves base of 6.3 billion barrels of oil equivalents.

Key characteristics of the new company will be a strengthened production and development portfolio, a presence in close to 40 countries, and a world-class value chain, the company said.

Statoil's shareholders will hold 67.3% of the new company, and Norsk Hydro's will hold 32.7%. Norsk Hydro shareholders will receive 0.8622 shares in the company for each Hydro share, and retain ownership of the Hydro aluminum assets, while Statoil shareholders will maintain their stock on a one-for-one basis. The Norwegian State will hold 62.5% in the merged company.

Completion of the merger, which is subject to approval by shareholders and regulatory authorities, is expected in the third quarter of 2007, and the entity will be renamed.

Statoil and Norsk Hydro were both recently knocked back by a rejection from Russia's Gazprom over proposals to develop the giant Shtokman gas field. A merger would improve the new company's bargaining position in projects of that type, analysts said.

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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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