The group will spin off its exploration and production division, Petrofac Energy Developments, and combine it with the UK Continental Shelf assets of Lundin in new firm EnQuest.EnQuest will have a market value of around $1 billion (£662m) in an initial public offering planned for later this year and would send it straight into the London Stock Exchange’s FTSE-250 midcap index. The new company will also have a secondary listing in Stockhom.
With proven oil assets of up to $1.2bn, the new business, called EnQuest, could be valued at up to £700m, making it a top-10 UK oil company.
Petrofac shareholders will be given shares in EnQuest amounting to 45% of the total while the Lundin family will own the other 55%, some of which they hope to sell on flotation.
Petrofac also said that two of its directors – including chief executive Ayman Asfari – may sell some of their shareholdings in EnQuest in a secondary offering to institutional investors.
The news sent Petrofac shares 9p lower to 1086p.
Petrofac’s North Sea exploration activities are centred on the Don field, which is located between Norway and Shetland.
It operates the west Don field and also owns a 60% interest in the south-west Don field, which together are capable of producing more than 40,000 barrels a day.
Lundin, which was formed in 2001 and has a market capitalisation of $2.4bn, controls the nearby Thistle, Heather and Broom fields, with production of hitting 24,000 barrels of oil a day. Petrofac hopes the new company will be able to maximise production in mature oil and gas fields as operators such as Shell, Total and Eni scale back their operations.
Once the deal goes through, Amjad Bseisu will step down from his role as chief executive of the Energy Developments business to take control at EnQuest.
Asfari said: “This demerger provides shareholders with an opportunity to retain an investment in a separately listed entity and the ability to participate in its future growth prospects.
“This is the first time we have harvested value from our Energy Developments business, and we will continue to seek value creating opportunities in oil and gas upstream developments and energy infrastructure.”
Analysts at Evolution turned thumbs down on the deal and cut its rating for Petrofac to “neutral” from “buy” with its target price maintained at 1200p.