Hydro, Statoil to Establish Offshore Oil Company

The boards of Norway's Hydro and Statoil have urged their shareholders to approve a deal that would merge their oil and gas assets. If approved, Norway's largest offshore oil company would be created, with a combined production of 1.9 million barrels per day in 2007 and proven oil and gas reserves of 6.3 billion barrels of oil equivalent.

Hydro's shareholders will hold 32.7% and Statoil's shareholders will hold 67.3% of the new company. Hydro's shareholders will receive 0.8622 shares in the new company for each Hydro share, and will continue as owners of Hydro. Statoil shareholders will maintain their holdings in the new company on a one-for-one basis. The Norwegian State will hold approximately 62.5 percent in the merged entity, Hydro said on its Web site. The statement said, he proposed merger is subject to approval by the general meetings of the two companies as well as by regulatory authorities. The general meetings are expected to be held during second quarter 2007. Final closing is expected to be in the third quarter 2007. In the meantime, Hydro and Statoil will be managed as separate companies. The management of Hydro and Statoil said the assets should be merged to achieve leading positions in the international energy sector given a complicated international environment. Hydro plans to keep working as an independent aluminum company. Hydro President Eivind Reiten, who is also likely to head the board of the new oil and gas company, said the restructuring of Hydro's aluminum assets is nearing completion. Following the merger, Hydro could become the world's third aluminum company in terms of market capitalization. The company will also retain its hydro-energy assets. Hydro and Statoil said December 13 they are still willing to join Russia's multibillion Shtokman gas project, even on new terms. Source: RIA Novosti