BW Offshore set to spin off $800 million oil unit in first quarter

OSLO (Reuters) - Oslo-listed BW Offshore BWO.OL plans to float its BW Energy oil and gas business in the first quarter of 2020, with an expected valuation of between $700 million and $800 million, the company said on Wednesday.

BW Offshore, a service provider to many petroleum producers, has in recent years built up its own exploration and production (E&P) operations through BW Energy, which has oil fields in Brazil and Gabon.

BW Energy aims to raise $175 million in cash in the initial public offering (IPO) to help fund output growth from 9,000 barrels of oil per day (bopd) in 2019 to a range of 50,000-60,000 bopd in 2023.

Most of the increase is expected to come from Brazil's Maromba field, in which BW Energy last year bought a 95% stake from Petrobras PETR4.SA and Chevron Corp. CVX.N. The field is due to start production in late 2022, ramping up to 29,000 bopd the following year.

“Our business model is to acquire resources that have already been found by others, and to develop those. We do not want to spend money on exploration in uncharted waters,” BW Energy Chief Executive Carl Arnet told Reuters.

BW Offshore first announced plans for the spin-off of BW Energy last year without providing a valuation or specific time frame for a listing.

“BW Energy has matured into a full ... E&P company with competencies covering the full scope of offshore field developments and a clear path to future production growth and value creation,” said group Chairman Andreas Sohmen-Pao.

The company said it aimed to pay out up to half of its net income in dividends to shareholders from the time when Maromba comes on stream.

BW Offshore also plans to distribute stakes in BW Energy directly to its own shareholders, it said.

Outside investors are expected to own a quarter of the shares in BW Energy after the transactions are completed, while BW Offshore and its parent company, Sohmen-Pao’s BW Group, will own the rest.

Shares of BW Offshore, which have risen by 64% in the last 12 months, were trading 1.9% lower at 1045 GMT, underperforming a 0.1% rise in Oslo's benchmark stock index .OSEBX.

Reporting by Terje Solsvik; Editing by Tom Hogue and Muralikumar Anantharaman, Kirsten Donovan