PGNiG Upstream Norway AS Signs SPA With Wellesley Petroleum AS To Acquire 40% Participating Interest in Ørn Development

20 May 2022

PGNiG’s Norwegian subsidiary has entered into an agreement with Wellesley Petroleum to acquire a 40% interest in licence PL942, covering the Ørn gas field. According to the Norwegian Petroleum Directorate, the field’s recoverable reserves are about 6.75 billion cubic meters of natural gas, 0.17 million tonnes of oil and 0.79 million tonnes of NGLs.

“The transaction of purchasing shares in the Ørn field confirms our aspirations for further dynamic development of production activities on the Norwegian Continental Shelf. It is our priority foreign market, also due to its importance for the diversification of gas supplies to Poland after the launch of the Baltic Pipe gas pipeline this year,” said Iwona Waksmundzka-Olejniczak, President of the Management Board of PGNiG SA. “The Ørn field fits perfectly with our plans for enhancing the production potential and further cost optimization of the Skarv area, which is the main hub of our operations on the Norwegian Continental Shelf. We highly value the opportunity to work with such an established and experienced partner as Wellesley Petroleum. The Ørn sale and purchase agreement is the result of a good and long-standing relationship between our companies,” she added.

The purchase of the Ørn field is the second transaction between PGNiG Upstream Norway and Wellesley Petroleum. In 2019, the companies signed a sale and purchase agreement for a 20 percent stake in concessions PL636 and PL636B covering the Duva deposit.

Chris Elliott, CEO of the Wellesley Group of companies, commented: “Ørn has been a very exciting and rewarding journey for us, from submitting the licence application document to a successful exploration drilling campaign and then maturing the discovery into a high quality development project. Transacting at this phase allows us to refocus resources into exploration and also demonstrates the enduring value creation potential of gas exploration in Norway. With excellent governance and a low carbon emissions profile, we are convinced that further exploration in Norway will ultimately deliver cleaner and more secure gas to Europe than can be obtained from any other source. We thank PGNiG for a constructive transaction process and are sure that their deep experience will make a positive contribution to the joint venture’s development planning”.

The Ørn field was discovered with an exploration well in 2019. Its development is expected to start in 2023, and production is expected from 2026. According to current data from the field operator, AkerBP, the production volume attributable to PGNiG Upstream Norway is expected to average about 0.25 billion cubic meters of natural gas per year in the period 2026-2035.

Ørn is located approx. 20 km from the Skarv field, in which PGNiG Upstream Norway also holds an interest. This will make it possible to use the existing production infrastructure, including the Skarv FPSO, to reduce time and costs of production start-up. PGNiG Upstream Norway has applied the same solution to its other deposits near Skarv: Ærfugl and Gråsel, providing for increased profitability of their production. The ability to use the existing infrastructure will enable the reduction of CO2 emissions associated with the development of the field.

The operator of the Ørn deposit is AkerBP, which holds a 30 percent stake. The other partner is Equinor Energy, also holding a 30 percent stake. The acquisition of the remaining 40 percent of shares from Wellesley Petroleum by PGNiG Upstream Norway is subject to the consents from, among others, the Norwegian Ministry of Petroleum and Energy.

PGNiG Upstream Norway holds interests in 59 licences on the Norwegian Continental Shelf and produces from fourteen fields. Last year, the Company’s natural gas production volume was 1.42 bcm, up from 0.48 bcm in 2020. The dynamic growth was possible thanks to, among other things, the acquisition of all assets of INEOS E&P Norge, including 21 licences, and other acquisitions in 2017-2020, as well as the completion of development of the Ærfugl field and the launch of production from the Gråsel and Duva fields. According to its production forecast, PGNiG expects to produce 3 bcm of natural gas from its assets on the Norwegian Continental Shelf in 2022.

Jefferies International Ltd. advised Wellesley on the transaction.

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