Det Norske Oljeselskap ASA’s share price up, to acquire the Norwegian unit of Marathon Oil Corp. in a 2.7-billion-dollar deal

The Chief Executive Officer of Det Norske Oljeselskap ASA – Mr. Karl Johnny Hersvik announced at a presentation today that the company is to acquire the Norwegian business of Marathon Oil Corp. in a transformational deal that is estimated at 2.7 billion dollars. The purchase is considered to be beneficial for the company and would help it increase its output about 14 times.

The Chief Executive Officer of Marathon Oil Corp. – Mr. Lee M. Tillman commented on the deal for the Wall Street Journal, saying: “The sale of our Norway assets advances one of our key 2014 priorities and further demonstrates our commitment to rigorous portfolio management to simplify and concentrate our business.”

Det Norske is currently half owned by Aker ASA, which is property to Kjell Inge Roekke. The acquisition is among the biggest ones for the Norwegian billionaire, who owns a number of companies focused on a variety of businesses, including oil services, engineering and even fishing.

The Chief Executive Officer of Det Norske – Mr. Karl Johnny Hersvik commented on the purchase in a Bloomberg interview: “This was the most attractive and less costly opportunity for Det Norske and our shareholders. It changes the whole setup. In one strike, we become a fully integrated E&P company through the whole value chain, from exploration and development to production.” As reported by the Financial Times, Mr. Hersvik also said: “Marathon Norway is an excellent fit for Det Norske, given the operational expertise, access to cash flow and the production profile it brings. The acquisition is important when it comes to meeting our funding requirements for Ivar Aasen and Johan Sverdrup.”

Det Norske Oljeselskap ASA has faced some questions from its investors, concerning the funding of its part of Sverdrups development. The companys total costs over the first phase for developing the Johan Sverdrup field, potentially Norway’s largest discovery since 1974, will probably amount to 120 billion kroner (20 billion dollars).

Det Norske Oljeselskap ASA was adding 8.29% to trade at 68.55 Norwegian krone per share by 14:08 GMT, marking a one year change of -26.05%. According to the information published on the Financial Times, the 15 analysts offering 12-month price targets for Det Norske Oljeselskap ASA have a median target of 92.00, with a high estimate of 115.00 and a low estimate of 70.00. The median estimate represents a 45.34% increase from the last price of 63.30.