By Terje Solsvik
OSLO (Reuters) -Norway's Aker BP will buy the oil and gas business of Sweden's Lundin Energy, forming the second-largest listed petroleum firm on the Norwegian continental shelf, the two companies said on Tuesday.
The cash and stock transaction values the acquired assets at approximately 125 billion Norwegian crowns ($13.9 billion), they said.
"The proposed combination has strategic, and value accretive benefits and the combined company will be characterized by increased scale, world-class quality, and high returns," Aker BP and Lundin said in a joint statement.
The shares of Aker BP jumped by 6% by 1537 GMT while those of Lundin Energy rose 4%.
The transaction will be settled through a cash payment of $2.22 billion and a share consideration of 271.91 million new shares issued from Aker BP and distributed to the Lundin Energy AB shareholders.
"We are now creating the E&P (exploration and production) company of the future which will offer among the lowest CO2 emissions, the lowest cost, high free cash flow and the most attractive growth pipeline in the industry," said Aker BP Chief Executive Karl Johnny Hersvik, who will remain CEO.
The companies could realise synergies of some $200 million per year in the form of cost cuts and other operational synergies, Hersvik told a conference call.
Aker BP also announced a 14% increase in its quarterly dividend to $0.475 per share from January 2022 and aims to further increase this dividend by a minimum of 5% every year from 2023 as long as oil prices stay above $40 per barrel.
The combined firm has pumped an estimated 400,000 barrels of oil equivalent per day (boed) in 2021 and expects to increase this to 475,000 boed in 2023, the companies said.
Production could dip to a level between 350,000-400,000 boed by 2026 before rising again to an estimated 525,000 boed in 2028 as more new fields come on stream and with additional upside potential, they added.
Norway's top oil producer is state-controlled Equinor which in 2020 pumped on average 1.32 million boed from the Norwegian continental shelf.
Closing of the Aker-Lundin deal, which depends on regulatory and shareholder approvals, is expected in the second quarter of 2022.
Aker ASA will own 21.2% of the merged firm, oil major BP will own 15.9%, while Lundin family company Nemesia will hold 14.4%.
($1 = 8.9705 Norwegian crowns)
(Reporting by Terje Solsvik, editing by Gwladys Fouche, Bernadette Baum, Jane Merriman and David Evans)