E&P Oil Stocks Fall as Norway Fund to Cease Investment
March 08 2019 - 8:37AM
Dow Jones News
By Oliver Griffin
Shares in a number of U.K. mid- and small-cap energy companies
fell Friday after Norway's government recommended its $1 trillion
oil fund stop investing in exploration and production equities.
Norwegian Finance Minister Siv Jensen said the objective is to
reduce Norway's vulnerability to a permanent oil-price decline.
The government recommended that the Government Pension Fund
Global, which is currently worth more than 8.90 trillion Norwegian
Kroner ($1.02 trillion), start selling shares in companies that
explore and produce oil and gas.
The finance minister said organizations classified as
exploration and production companies by the index provider FTSE
Russell will be excluded from the fund's benchmark index and
investment universe.
Companies defined as exploration and production businesses in
the fund include Tullow Oil PLC (TLW.LN) and Premier Oil PLC
(PMO.LN), in which the oil fund holds respective 2.1% and 1.8%
stakes.
The oil fund holds around $37 billion in oil-and-gas stocks, and
Ms. Jensen said a permanent reduction in the oil price will have
long-term implications for public finances.
The exclusion of energy stocks in the fund will serve to further
reduce the oil-price risk, the government said.
However, Norway won't look to pull out of integrated companies
that have businesses throughout the value chain of the oil-and-gas
industry.
Examples of integrated U.K. oil-and-gas companies include Royal
Dutch Shell PLC (RDSB.LN) and BP PLC (BP.LN).
Ms. Jensen said almost all the growth in listed renewable energy
over the next decade will be driven by companies that do not have
renewable energy as their main business.
"The fund should be able to participate in this growth," she
said.
The Norwegian government isn't planning to sell shares relating
to its direct interest in Equinor ASA (EQNR.OS), Ms. Jensen
said.
At 1350 GMT shares in Tullow Oil and Premier Oil were down 3%
and 3.8% respectively at 220.20 pence and 76.45 pence each.
Write to Oliver Griffin at oliver.griffin@dowjones.com;
@OliGGriffin
(END) Dow Jones Newswires
March 08, 2019 09:22 ET (14:22 GMT)
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