NORTH Sea focused Ithaca Energy has agreed to offload its Norwegian operations to ambitious Hungarian oil and gas firm MOL in a deal which could be worth up to £60 million.
Ithaca acquired the bulk of the assets through its £203m takeover of Valiant Petroleum in 2013 and said it had always planned to sell them at some point.
The transaction will see MOL pay an initial £40m for Ithaca Petroleum Norge with a further £20m contingent on the results of drilling on Norwegian licences over the next two years.
MOL highlighted the "synergy potential" it sees with its existing North Sea operations in the UK. Its MOL Energy UK subsidiary is based in Aberdeen.
The deal cheered investors in Ithaca with shares rising as much as three per cent.
Ithaca said that after paying off a Norwegian financing facility and making adjustments to working capital it expects to get an initial net cash receipt of around £20m.
That money will be used to offset drawings from its existing bank debt facility.
The deal is expected to formally complete in the third quarter of this year although it is subject to approval by the Norwegian ministry of petroleum and energy.
Les Thomas, Ithaca chief executive, said: ""The team has done an excellent job in restructuring the Norwegian business following its acquisition as part of the Valiant transaction in 2013.
"The sale provides Ithaca with the right opportunity to now monetise the value of this non-core part of the company while retaining upside exposure to the anticipated drilling programme over the next two years."
MOL said it was acquiring 14 licences in the Norwegian Continental Shelf including three which it would be operator of.
Within that are shares in producing assets Blekksprut and Roald Rygg.
The Budapest firm indicated the best estimate of the prospective resources was 600 million barrels of oil equivalent and there were three wells scheduled to be drilled across 2015 and 2016.
MOL said the deal gave it an excellent starting point for it to enter Norway and expand its presence in the North Sea.
It said it was keen to add further assets and licences in the area.
Alexander Dodds, group executive vice president for upstream, said: "Entering Norway as one of the most investor friendly countries is an important milestone in our exploration and production strategy.
"It enhances our positions in the lower risk offshore North Sea area where we are in the process of building a new production hub and know-how centre along the whole exploration and production value chain that should serve as a solid basis to our long term goals in the region."
MOL also pointed out it was acquiring an exploration focused team of people with "deep experience" on the Norwegian Continental Shelf.
Just a few weeks ago Ithaca wrote £295m off the value of its oil and gas fields in the UK to reflect the plunge in oil prices.
It warned it may make a loss on production from two North Sea fields this year but said it could still make money from its output even if crude prices fell below current levels.
A hedging contract it agreed means it has a breakeven price from its current producing assets of just $10 a barrel.
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