Faroe Petroleum has agreed to swap oil and gas fields with Norwegian state firm Equinor as it fights a hostile takeover from DNO.
The move, which is expected to increase Faroe’s output by around 60 per cent in 2019, could bump up its price in the face of DNO’s bid.
The company takes over stakes in the active Alve, Marulk, Ringhorne East and Vilje fields while handing over part of the Njord/Hyme/Bauge development to Equinor.
“On the face of it this looks like an excellent deal for Faroe – we struggle to see any significant downside,” Daniel Slater at Arden Partners said.
He added: “It achieves an almost immediate increase in production and cash flow while also saving on forward capital expenditure, which should give the company increased balance sheet flexibility.”
Chief executive Graham Stewart insisted the deal was already in the pipeline before DNO launched its £608m offer last month.
“The deal hasn’t happened overnight. We haven’t pulled it as a rabbit out of the hat as a defense strategy even if it looks like [it],” Stewart told Reuters.
The oil company rejected DNO’s November bid, saying it undervalued its shares.
“We want to secure the best value for our shareholders, and the latest deal cannot be ignored,” Stewart added.
DNO said: “While Faroe has asserted this is not designed to stop the DNO offer, we need to ask if this is good value for a company seeking growth […] That is the test this deal needs to satisfy.”