The cash consideration for the above transactions as of the effective date 1st of January 2003 is USD 165 million payable at closing. Certain adjustments, estimated to be approximately USD 40 mill., will be made for working capital, cash flow generated, and/or funding requirement from the effective date to closing.
In addition, Lundin Petroleum AB has agreed to provide an abandonment security which will allow for the release of USD 35 mill. in restricted cash to DNO.
Based on the above, the net cash effect to DNO ASA at closing is estimated to be approximately USD 240 mill.
The closing of the transactions will be subject to necessary approvals from the relevant authorities in the UK, Ireland and Norway. Closing is estimated to take place during 1st half of 2004. As a result of this the consolidated accounts for DNO ASA will not reflect the sales in 2003.
The transaction includes:
i) DNO Britain Limited which through, wholly owned subsidiaries, includes the following interests:
- 100% Heather field
- 99% Thistle field
- 55% Broom field
The Heather and Thistle fields are mature producing fields in the UK North Sea whilst the Broom field is a newly designated field adjacent to the Heather field currently under development. The Broom field will be tied back to the Heather facilities thereby further extending the economic life of the Heather field. The Broom field is a sub-sea development expected to start production by the middle 2004. Lundin Petroleum will, through the acquisition of DNO Britain, assume operatorship of these fields, subject to DTI approval and will take responsibility for all DNO's UK employees and its Aberdeen office.
ii) Island Petroleum Developments Limited's ("IPDL"), with it's major asset being the12,5 % working interest in the Seven Heads gas field operated by Ramco which is expected to begin production towards the end of 2003 using the existing Kinsale Head facilities.
iii) Norwegian assets including a 7% working interest in the producing Jotun field operated by ExxonMobil, a 15% interest in PL203, PL088B and PL036C operated by Marathon which includes existing oil and gas discoveries expected to be developed as part of the West of Heimdal project, and various other exploration assets.
Assets to be retained by DNO are:
i) The 10 % working interest in the producing Glitne field in Norway.
ii) The Yemeni assets including the 38,95 % working interest in Block 32 (Tasour Field), 24,45 % working interest in Block 53 (Sharyoof Field) and 50 % working interest in Block 43.
iii) The 5 % working interest in Block P, Equatorial Guinea and the 80 % working interest in Inhaminga Block, Mozambique.
DNO believes that this transaction realises the substantial value created since DNO's new strategy was launched in 1996.
Following closing, DNO will have the financial strength to aggressively pursue and create value from new oil & gas opportunities under evaluation.
Some further information about the transactions will be provided during the presentation of 3rd Quarter interim results on 19th November 2003.
13. November 2003
For further information please contact::
Group Managing Director
Telephone: (+47) 55 22 47 00 / (+47) 23 23 84 80