Equinor increases stake in Gulf of Mexico oilfield

OSLO/LONDON: Norwegian oil company Equinor has increased its stake in the Caesar Tonga oilfield in the US Gulf of Mexico by buying Royal Dutch Shell's 22.45% stake for $965 million in cash.

The sale to Equinor overrides a sale Shell had agreed in April with Israeli oil and gas producer Delek Group to acquire the same stake for an identical price.

Shell said in a statement that Equinor "exercised its preferential rights to acquire Shell's 22.45% non-operated interest, that was to be acquired by Delek."

It is not uncommon for existing partners in oil and gas projects to pre-empt new entrants from buying a stake.

The deal will increase Equinor's interest in the deepwater field, operated by Anadarko, to 46%, giving the company an additional 15,000 barrels of oil equivalent per day.

Equinor's current net production from the field is 18,600 boepd, compared to the company's total US Gulf of Mexico production of 110,000 boepd in the first quarter.

"We are pleased to increase our presence in the United States, one of our core areas," the head of Equinor's offshore US production, Christopher Golden, said in a statement on Monday.

"This is an asset we understand well, and our larger interest will deliver significant additional free cash flow from day one," he added.

Later this year, Equinor will drill an exploration well at its Monument prospect in the Gulf of Mexico, which could further increase the company's foothold in the area, Golden added.

Andarko has a 33.7% interest in Caesar Tonga, while Chevron holds the remaining 20.25%.

The deal is expected to close in the third quarter of the year, Shell said.