NORWEGIAN companies BW Offshore and Prosafe Production are merging to create the second-largest floating production, storage, and offloading vessel (FPSO) lease operator in the world with a diversified portfolio of 15 vessels working, and for major new projects under way.
The essence of the arrangement is that BW Offshore is buying rival Prosafe in deal valued at $629million . BW Offshore is offering 1.2 of its shares and 3.00 Norwegian crowns ($0.489) in cash for every Prosafe share.
The two deals represent a significant shift in the FPSO market and show how determined the Norwegians are to sustain a considerable share of a market where the UK is invisible.
In a joint statement Ronny Johan Langeland and Andreas Sohmen-Pao, chairman and board member of Prosafe Production and BW Offshore respectively said: “We are creating an FPSO industry leader with a global footprint that is well positioned to capture the attractive growth opportunities we now see in the market.
“The FPSO sector needs larger entities that can meet steadily increasing requirements from clients and regulators.
“The combined entity will have the sufficient diversification, presence, financial scale, and competence to play a more significant role in the FPSO space going forward, and we are very enthusiastic about what our two companies can become together.”
If all Prosafe shareholders accept the offer, they will hold about 34%, and BW Offshore’s shareholders will hold some 66% of the combined company. BW Group will be diluted to around 47% ownership.
In a separate move, BW said that it had agreed to sell its entire interest in its subsidiary APL (Advanced Prodution & Loading) to National Oilwell Varco for some $500million .
APL designs and makes turret mooring systems and other products for FPSOs.
As part of the agreement, National Oilwell and BW Offshore will enter into product supply and non-competition agreements.
National Oilwell’s chairman and CEO, Pete Miller, said: “We are excited about this opportunity to expand our product offerings in the FPSO market, which we consider to be the next phase of deepwater development in the oil and gas sector.”