Vaar Energi to buy BlueNord for $1.3 billion to create leading European oil and gas producer

(Corrects Vaar's expected financial synergies from the transaction to show that they are through 2032 instead of on an annual basis, paragraph 15)

By Louise Rasmussen

COPENHAGEN, July 21 (Reuters) - Norway's Vaar Energi said on Tuesday it will buy smaller Oslo-listed rival BlueNord to form Europe's largest independent oil and gas producer by output, in a deal indicated at around $1.33 billion.

News of the deal sent shares in both companies up more than 5%.

Vaar Energi, majority owned by Italy's Eni, currently focuses on Norwegian oil and gas production, while BlueNord's assets are located on Denmark's continental shelf.

"We want to continue to grow ... I still think there are opportunities to consolidate in Norway, but at some point it becomes natural that we start to look outside," Vaar CEO Nick Walker told journalists during a call.

"Going to Denmark is a similar risk profile as we have in Norway, similar characteristics, and I think it's a very complementary transaction," he said.

Shares in Vaar traded up 5.3% by 0952 GMT, while BlueNord's rose 6.3%.

The combined company expects to pump close to 450,000 barrels of oil equivalent (boed) per day in 2026, with Vaar contributing between 390,000 boed and 410,000 boed and BlueNord predicting it will produce 45,000 boed.

Vaar said it had set a long-term goal of maintaining output at around 450,000 boed, although it could also continue to grow via additional acquisitions.

Norwegian rival Aker BP said last week it aims to produce between 380,000 boed and 400,000 boed this year, but with plans to increase this in the coming years as new fields come on stream.

Under the deal, BlueNord owners will receive 248.4 million new Vaar Energi shares and 1.96 billion Norwegian crowns ($202.95 million) in cash, equating to 9.7153 shares in Vaar Energi and 76.83 crowns in cash for each share held in BlueNord, the companies said. 

The transaction valued BlueNord at 12.84 billion Norwegian crowns when measured at Monday's closing price for the Vaar Energi share, equivalent to $1.33 billion, according to a Reuters calculation.

Norwegian investor Erik Bakkejord's company Sober AS holds a 4.57% stake in BlueNord and said in March that it would remain a long-term investor.

Other major BlueNord stakes are mostly held by financial investors in accounts managed by the likes of Bank of New York Mellon, Citibank and Goldman Sachs, according to a list of shareholders on the oil company's website.

VAAR INCREASES SECOND-QUARTER DIVIDEND TO $350 MILLION

The boards of both Vaar Energi and BlueNord have approved the deal and consider it in the best interests of each company and their respective shareholders, they said.

Vaar estimated that it would achieve accumulated financial synergies from the transaction through 2032 of between $250 million and $300 million in the form of lower financing costs, reduced overheads and a strengthened gas sales portfolio.

As a result, Vaar intends to increase the overall dividend payment for the second quarter of 2026 to $350 million from $300 million previously, it said.

Eni said it will remain a long-term majority shareholder in the new group, while BlueNord's current owners will hold a 9.05% stake.

Vaar Energi separately reported an 87% year-on-year rise in April-June earnings before interest and tax (EBIT) to $2.24 billion on Tuesday, matching the average $2.30 billion forecast in a company-compiled poll of 12 analysts.

($1 = 9.6577 Norwegian crowns)

(Reporting by Louise Rasmussen; Editing by Terje Solsvik, Joe Bavier and Susan Fenton)