Poland’s Lotos pushing for upstream assets with Norwegian acquisition

By bne IntelliNews November 1, 2015

Lotos has bought Norwegian offshore oil and gas exploration assets from Exxon Mobil’s Norwegian subsidiary for USD 160mn (€145mn), the Polish state-controlled company announced on October 31.

Like other refiners, Lotos - which reported vastly improved net profit of PLN128mn (€30.1mn) after the first three quarters of 2015 - is looking to bulk up on upstream assets.Peer PKN Orlen, has also purchased production assets recently, as the pair chases low valuations on exploration licences thanks to low global crude pricing.

Following the transaction, which is set to finalise by end of 2015, Lotos will have a 15% stake in four production fields in Norway’s continental shelf. Norway’s Statoil is the operator on Sleipner Ost, Sleipner Vest, Gungne, and Loke. The transaction may be broadened by taking over a 28% stake in Alfa Sentral production field for $25mn, pending on consent from the Norwegian oil and gas regulator.

Lotos assumes it will produce 16,000 barrels of oil equivalent per day (boe/d) from the acquired assets in 2015, out of which 70% will be gas and the remaining 30% condensate (light oil). The production rate will drop to 9,500 boe/d in 2016-2018.

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