Gazprom and OMV swap assets in Russia and Norway Report

Deal Insight 22 December 2016

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Report summary

OMV and Gazprom have agreed to an asset swap which sees OMV gain a 25% share in two blocks in the Urengoiskoye gas and condensate field in West Siberia, and Gazprom gain a 39% share in OMV's Norwegian upstream business. The asset swap is designed to be value neutral. We value the interest in Urengoiskoye obtained by OMV higher than the stake in OMV Norge obtained by Gazprom. But there is upside to our OMV Norge valuation through exploration and appraisal around the Wisting discovery in the Barents sea. OMV is reducing its exposure to high-cost production in the North Sea, and recently sold its UK subsidiary. The deal gives Gazprom international support to develop the challenging Achimov reservoirs and diversifies its upstream portfolio through the addition of 80 mmboe of net commercial reserves with exploration upside.

Executive summary
Transaction details
- Background
Upstream assets
- Edvard Grieg (7.7%)
- Aasta Hansteen (5.78%)
- Gullfaks Area (7.32%)
- Gullfaks Sør (7.32%)
- Exploration
- Urengoiskoye (Blocks IV & V) (24.98%)
Deal analysis
Upsides and risks
- Upsides to OMV Norge valuation
- Risks to OMV Norge valuation
- Regulatory risk
Strategic rationale
- Gazprom
- OMV
Oil & gas pricing and assumptions