FORTUM SELLS NORWEGIAN E&P BUSINESS TO ENI

Fortum has reached an agreement with Eni to sell Fortum Petroleum AS (“FPAS”), its Norwegian Exploration & Production business, for a total consideration of approximately USD 1.1 billion. The agreement is the result of the strategic review of Fortum´s Norwegian E & P business that was launched in May 2002. It represents a further significant step in Fortum´s restructuring programme of focusing on its core businesses and divesting non-core assets. With this transaction, Fortum´s gearing will decline from 84% to 71% on a pro-forma basis.

 

Fortum has reached agreement with Eni to sell its Norwegian E & P business for USD 1,078 million in cash. The consideration comprises USD 420 million in cash for 100% of the equity plus USD 658 million for the assumption of interest-bearing loans.* At year-end 2001 FPAS had reserves of approximately 210 million barrels of oil equivalent.

 

The financial effects of the transaction will be dependent on the results of FPAS during the fourth quarter of 2002. It is currently estimated that the transaction on a pre-tax basis will be neutral to earnings, and will incur a tax charge of about EUR 70 million. Fortum plans to use the proceeds to pay down debt. Based on the 30 September balance sheet, Fortum’s 2002 net indebtedness will be reduced to EUR 5.1 billion on a pro forma basis, and gearing will be reduced from 84% to 71%.

 

Completion of the sale, which is conditional on clearance by the European Union and Norwegian Authorities, is expected in the first quarter of 2003.

 

”We are very pleased with the outcome of this process. The transaction is another significant step forward in Fortum´s strategy of focusing on its core power and heat business and clean fuels refining and marketing business. The sale of FPAS strengthens Fortum´s balance sheet and is consistent with our strategic agenda”, said Mikael Lilius, President and CEO of Fortum.

 

Fortum Corporation

 

Carola Teir-Lehtinen

Senior Vice President, Corporate Communications

 

For further information, please contact:

 

Mr Juha Laaksonen, CFO, tel. +358 10 45 24519

Mr Veli-Matti Ropponen, President, Oil sector, tel. +358 10 45 24115

 

Fortum

 

Fortum is a leading energy company in the Nordic area. It is one of the two largest companies in electricity distribution and sales as well as in power and heat generation in the Nordic market. Fortum is also the market leader in the production and marketing of high-quality environmentally benign oil products in the Baltic Rim. In 2001, Fortum net sales totalled EUR 10,410 million, and the average number of employees was 14,800.

 

Fortum Petroleum AS

 

Fortum Petroleum AS is an oil and gas exploration and production company operating on the Norwegian continental shelf. Its main assets are interests in three oil and gas producing fields (Åsgard, Heidrun and Brage) with current production of approximately 40,000 boe per day. The company has 39 employees and made an operating income of USD 135 million on sales of USD 295 million in 2001.

 

Buyer

 

Eni, the Italian Oil and Gas Company established in 1953, operates in 67 countries in the oil upstream, the natural gas, the refining and marketing as well as in the oilfield services and engineering businesses. In 2001 Eni posted revenues of EUR 48,925 million with a net profit of EUR 7,751 million. In the upstream, average oil and gas production reached 1.45 million boe per day during the first nine months of 2002 . At the end of last year  Eni‘s proven hydrocarbon reserves stood at 6.9 billion boe .

 

-- PRESS CONFERENCE –

 

A press conference will be held today at Fortum’s head office in Keilaniemi, Espoo at 11.00 a.m. Finnish time. You are welcome to participate.

 

-- TELECONFERENCE –

 

There will be an international teleconference for analysts and investors today at 14.00 hrs UK time (16.00 hrs Finnish time). You are welcome to listen to the teleconference. Please note that you will not be able to ask questions.

 

Please dial one of the following numbers and request to be connected to the Fortum teleconference: International dial in +44 (0) 1452 568 063, UK telephone dial in 0800 953 0934, USA Freephone 1866 224 2843

 

 

*)The value of the transaction is as at June 30, 2002. The selling price (USD 420 million) will accrue interest from 30 June 2002 until completion. The interest-bearing loans USD 658 million) have been issued by Fortum to Fortum Petroleum AS. They will be partly repaid through Fortum Petroleum AS free cash flows generated up to closing and the outstanding balance will be assigned to Eni for cash at closing.