Equinor wraps up US Bakken sale

Norway's Equinor reported on April 27 it had closed the sale of its interests in the Bakken formation in the US states of North Dakota and Montana to Grayson Mill Energy, backed by US private equity firm EnCap Investments, for $900mn.

The sale, first announced in February, involves all Equinor's operated and non-operated acreage and associated midstream assets in Bakken, which delivered a combined 48,000 barrels of oil equivalent/day for the company in the fourth quarter of last year. Equinor will continue operating the assets for up to four months after the closure as part of a transition service agreement with Grayson.

Nearly all Equinor field staff and many support personnel will be transferred to Grayson. Equinor also has a long-term offtake agreement for crude oil from the assets.

Equinor has sustained billions of dollars of losses from its US investments over the years, with the $900mn price tag representing a fraction of what the company paid for the Bakken assets nearly a decade ago. Equinor CEO Anders Opedal told investors in an earnings call on February 10 that the investments were made with the expectation of bullish oil prices over the long term. Instead, the oil market has undergone two turbulent downturns in recent years.

Equinor's expectations were "way too optimistic," Opedal said. "We have taken impairments, and we are realising a significant loss."

The company has faced criticism from Norwegian authorities over its US losses, with a report by PwC last October concluding that the company had underestimated the complexity and risk of working in the US onshore, and had overstretched itself. The government has demanded greater transparency regarding Equinor's international operations as a consequence.