By Terje Solsvik

OSLO (Reuters). -Norway’s Aker BP will purchase the oil and natural gas operations of Sweden’s Lundin Energy. This will create the largest listed Norwegian petroleum company on the Norwegian continental shelves, according to the companies.

They estimated that the cash- and stock transaction value of acquired assets was approximately 125 billion Norwegian Crowns (or $13.9 billion).

Aker BP and Lundin stated in joint statements that “the proposed combination has strategic and value accretive benefit and the combined company is characterized by increased scaling, world-class QUALITY and high returns.”

Aker BP shares rose by 6% in 1537 GMT, while Lundin Energy’s share increased by 4%.

This transaction will result in a $2.22 Billion cash payment and 271.91 Mn shares of Aker BP being issued. These new shares will then be distributed to shareholders of Lundin Energy AB.

“We are now creating the E&P (exploration and production) company of the future which will offer among the lowest CO2 emissions, the lowest cost, high free cash flow and the most attractive growth pipeline in the industry,” said Aker BP Chief Executive Karl Johnny Hersvik, who will remain CEO.

Hersvik stated that the companies can realize synergies worth around $200 million annually through cost reductions and other operational synergies.

Aker BP has also increased its quarterly dividend 14% to $0.475 per Share starting in January 2022. The company plans to continue increasing this dividend at a minimum of 5% per year starting 2023. As long as the price of oil remains above $40 per barrel,

According to the companies, combined oil firm has already pumped approximately 400,000 barrels per day of equivalent oil (boed), in 2021. It expects to pump 475,000 boed by 2023.

They said that production could fall to 350,000 to400,000 boed in 2026, before increasing to 525,000 boed annually by 2028 when more fields are developed and have additional upside potential.

Equinor, a state-owned oil company in Norway, is the country’s largest producer of crude oil. It pumped an average of 1.32 million barrels per day from Norway’s continental shelf in 2020.

The closing of the Aker/Lundin deal is subject to regulatory approvals and shareholder approvals. It is anticipated that it will be completed in the second quarter 2022.

Aker ASA, the oil major BP, will have 15.9% of the merged company, while Lundin family firm Nemesia will have 14.4%.

($1 = 8.9705 Norwegian crowns)