(WO) — Vår Energi has agreed to combine with BlueNord in a transaction that will create the largest independent oil and gas producer in Europe, expanding Vår Energi's footprint into the Danish Continental Shelf while boosting production, reserves and cash flow.

The boards of both companies have unanimously approved the transaction, which will be executed through a merger of BlueNord into a newly established Vår Energi subsidiary. BlueNord shareholders will receive 248.4 million newly issued Vår Energi shares and NOK 1.96 billion (approximately $204 million) in cash, equivalent to 9.7153 Vår Energi shares plus NOK 76.83 in cash for each BlueNord share.

The combination will increase long-term production to approximately 450,000 boed and add a portfolio containing roughly 2.4 billion boe of reserves and resources with an estimated reserve life of about 15 years. The combined company will maintain a production mix of roughly 65% oil and 35% gas while expanding access to European gas markets through new delivery points at Nybro in Denmark and Den Helder in the Netherlands.

BlueNord contributes interests in several producing Danish Continental Shelf assets, including the Tyra, Halfdan, Dan and Gorm hub areas. Operated by TotalEnergies through the Danish Underground Consortium, the assets are expected to contribute approximately 45,000 boed of net production beginning in 2026 and approximately 195 MMboe of net reserves and contingent resources, extending production beyond 2040.

The acquisition marks Vår Energi's first major expansion outside Norway, adding long-life producing assets in a basin the company said shares geological, operational and fiscal similarities with the Norwegian Continental Shelf.

"This transaction marks a significant milestone in Vår Energi's growth journey, creating the largest independent producer of oil and gas in Europe with a long-term production target of approximately 450 thousand barrels per day," said Nick Walker, chief executive officer of Vår Energi.

Vår Energi expects the transaction to generate $250 million to $300 million in cumulative after-tax synergies between 2027 and 2032 through lower financing costs, reduced overhead and commercial efficiencies. The company also said the acquisition is expected to increase production, reserves, operating cash flow and free cash flow on a per-share basis while strengthening its long-term dividend capacity.

BlueNord Chief Executive Officer Euan Shirlaw said the merger creates "a North Sea company of real scale and resilience," while giving BlueNord shareholders continued exposure to future growth through ownership in the combined company. He said the enlarged business will have the financial strength and diversification to support long-term shareholder returns.

Following completion, Vår Energi intends to maintain its dividend policy of distributing 25% to 30% of after-tax operating cash flow over the commodity price cycle. The company also plans to increase its second-quarter 2026 dividend to $350 million, with an additional $350 million distribution planned for the third quarter following completion of the merger.

The transaction remains subject to shareholder approvals, customary regulatory clearances and other closing conditions.