Lundin Energy exploring sale of $10 billion Nordic oil producer

The Swedish company is working with an adviser to study strategic alternatives, the people said, asking not to be identified because the information is private.

Shares of Lundin Energy gained as much as 14% Monday, the biggest intraday jump since April 2020. They were up 10% at the close in Stockholm, giving the company a market value of about 96.8 billion kronor ($10.6 billion).

Lundin Energy owns a stake in Norway’s giant Johan Sverdrup field, which is operated by Equinor ASA. It’s also the operator of the Edvard Grieg oil field on the Norwegian continental shelf.

The oil and gas industry has seen a flurry of dealmaking as energy majors seek to offload non-core assets and take advantage of improved prices.

Family owners
Royal Dutch Shell Plc agreed earlier this year to sell its Permian Basin assets in the U.S. to ConocoPhillips for $9.5 billion, while BHP Group reached a deal to combine its oil and gas operations with Woodside Petroleum Ltd. Neptune Energy Group Ltd.’s owners are considering a sale that could value the U.K. explorer at more than $5 billion, Bloomberg News reported last week.

Lundin Energy’s deliberations are ongoing, and there’s no certainty they will lead to a transaction, the people said. The company could also consider other options such as a merger or asset disposals, the people said.

An investment vehicle controlled by Lundin family trusts is the Swedish company’s biggest shareholder with a 33% stake, according to data compiled by Bloomberg. A representative for Lundin Energy declined to comment.

“Lundin’s interest in a potential sale or merger arguably offers the most energy-transition-resilient portfolio in the industry, with its low-cost production scale, clear growth visibility and best-in-class unit carbon intensity. The size of the deal would likely exclude independent peers and private equity, though we believe TotalEnergies could be a potential suitor, given the company’s balance-sheet capacity and compelling operational overlap at the Johan Sverdrup field.”

Investor pressure
A sale of Lundin Energy would help its family owners get out of their largest oil and gas holding at a time when the industry’s future is increasingly fraught. The Lundins have a range of other interests in the resources sector, with major stakes in roughly a dozen listed companies including copper producer Lundin Mining Corp., precious metal miner Lundin Gold Inc., gold developer Bluestone Resources Inc. and explorer NGEx Minerals Ltd.

Earlier this month, Swedish prosecutors charged Lundin Energy Chairman Ian Lundin and one of the firm’s directors, Alex Schneiter, with alleged complicity in war crimes committed by the former Sudanese regime. The company said they strongly deny the charges, which relate to past operations in the country that Lundin Energy sold in 2003. The chairman plans not to stand for re-election at next year’s shareholder meeting.

Lundin Energy has been seeking to burnish its environmental credentials amid increasing investor pressure for oil and gas producers to grapple with climate change. In June, Lundin Energy said it would neutralize its share of direct emissions from the Johan Sverdrup field, a first for a major oil facility.