Equinor is making an exit from the core US shale play of the Bakken after agreeing to sell its assets to Grayson Mill Energy in a deal worth $900 million.
The sale to the EnCap Investments-backed company includes all of Norwegian state-controlled Equinor's operated and non-operated acreage — totalling around 242,000 net acres — in the vast shale play in the states of North Dakota and Montana.
Gain valuable insight into the global oil and gas industry's energy transition from ACCELERATE, the free weekly newsletter from Upstream and Recharge. Sign up here today.
The deal — which has an effective date of 1 January this year — also incorporates associated midstream assets in the Bakken.
Equinor's entitlement production from these assets in the fourth quarter last year was 48,000 barrels of oil equivalent per day, net of royalty interests.
Along with the asset sale, Equinor will also enter into a term purchase agreement for crude offtake from Grayson Mill.
Equinor chief executive Anders Opedal said: "Equinor is optimising its oil and gas portfolio to strengthen profitability and make it more robust for the future.
"By divesting our Bakken position we are realising proceeds that can be deployed towards more competitive assets in our portfolio, enabling us to deliver increased value creation for our shareholders."
Equinor's vice president of development & production international, Al Cook, added that the company is "taking action to improve the profitability of (its) international oil and gas business".
Oslo-listed Equinor added that, "as part of the agreed transaction, all Equinor field employees and a significant number of the support teams working on the Bakken assets will have the opportunity to transfer to Grayson Mill Energy".
In the red
Equinor also revealed on Wednesday that it sank to a loss of $5.5 billion for the full year last year, as against a profit in 2019 of $1.85 billion.
Full-year revenues sank to $45.75 billion from $62.91 billion as commodity prices were hammered by the reduced global demand caused by the coronavirus pandemic.
For the fourth-quarter last year, the net loss was $2.42 billion, down from a year-earlier loss of $230 million.
Revenues in the fourth quarter last year were $11.88 billion, down from $14.9 billion at the end of 2019.
Average production in the fourth quarter was 390,000 barrels of oil equivalent, down from a year earlier of 437,000 boepd. The drop was mainly due to the sale of Eagle Ford assets in the US, planned maintenance and weather-related shutdowns in the US Gulf of Mexico.
For the period 2020 to 2026, production growth is set to come from new projects, resulting in an around 3% compound annual growth rate based on current forecasts. Production for this year is seen coming in around 2% above last year.
Organic capital expenditure is set to average $9 billion to $10 billion per annum this year and next.
For exploration, Equinor expects to spend around $900 million this year.