(Bloomberg) -- Eni SpA and HitecVision AS are seeking as much as 6.9 billion kroner ($800 million) from an initial public offering of their Norwegian joint venture, in one of the largest European energy listings in a decade.
Var Energi AS, which was formed by the 2018 merger of Eni Norge and Point Resources AS, is valued at as much as 79 billion kroner in the Oslo listing. The offering will be a crucial test of investor appetite for oil and gas companies after years of poor returns soured sentiment toward the industry.
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Several proposed European energy IPOs were paused in the past two years as the pandemic roiled markets. While climate concerns are still a major issue for the sector, soaring commodity prices, tightening supplies and geopolitical tensions in Europe are spurring investors to rethink their disavowal of fossil-fuel producers.
Still, Var Energi scaled back the size of the offering and its valuation target after rocky markets weighed on investor demand, according to people familiar with the matter. It was initially looking to net a market value of as much as $15 billion, the people said, asking not to be identified because the information is private.
A representative for Var Energi declined to comment when contacted by Bloomberg News.
Shares are being marketed at 28 kroner to 31.50 kroner each through Feb. 15, with the new stock to start trading the next day.
Eni and HitecVision, who currently own 69.85% and 30.15% respectively, and the underwriters have options to sell additional shares, which boost the total deal size to as much as 10 billion kroner at the top of the price range. No oil & gas company in Europe has raised $1 billion or more in an initial share sale since 2011, data compiled by Bloomberg show.
Var Energi is a substantial player off Norway's coast with a net daily production of 247,000 barrels of oil equivalent in September. The company operates four fields in Norwegian waters, including Goliat -- the country's only producing oil field in the Barents Sea.
In initial IPO documents published on Jan. 24, the company said it intended to pay dividends of $700 million over the course of 2022. On Friday, it increased that guidance to a minimum of $800 million, with a dividend of $225 million for the first quarter.
Morgan Stanley, JPMorgan Chase & Co., DNB Markets and SpareBank 1 Markets are joint global coordinators, alongside bookrunners ABG Sundal Collier Holding ASA, Bank of America Corp., Carnegie Investment Bank AG, Jefferies Financial Group Inc. and Pareto Securities AS.
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