Shell sells part of North Sea assets for US$3,8b

LONDON – Anglo-Dutch energy giant Royal Dutch Shell has agreed to sell a chunk of its North Sea assets to oil explorer Chrysaor for up to US$3,8 billion, it said yesterday.

The deal, which will more than halve Shell’s North Sea production, is part of a vast divestment plan as the company streamlines its portfolio following the blockbuster takeover of rival BG Group last year.

Separately, the company had already revealed earlier yesterday that it has offloaded its stake in an offshore Thai gas field to Kuwait Petroleum Corp for US$900 million.

Shell announced in a new statement that it will sell its entire holdings in nine North Sea oil fields, plus a smaller stake in a 10th field to Chrysaor.

The package comprises Shell’s interests in Buzzard, Beryl, Bressay, Elgin-Franklin, J-Block, the Greater Armada cluster, Everest, Lomond and Erskine, plus a 10% stake in the Schiehallion field.

“This deal shows the clear momentum behind Shell’s global, value-driven US$30 billion divestment programme,” said Shell’s chief financial officer Simon Henry in the statement.

“It builds on recent upstream divestments in the Gulf of Mexico and Canada. It is also consistent with Shell’s strategy to high-grade and simplifies our portfolio following the acquisition of BG, to ensure the company represents a world-class investment case.”

The total price tag consists of an initial sum of US$3 billion, plus a payment of up to US$600 million between 2018 and 2021, subject to commodity prices, with potential further payments of up to US$180 million for future discoveries.

The transaction remains subject to partner and regulatory approvals, while completion is pegged for the second half of 2017. About 400 staff are expected to transfer to Chrysaor.

Shell’s share of total production from the fields comprised about 115 000 barrels of oil equivalent per day (boepd) in 2016. That was more than 54% of its total North Sea output of 211 000 boepd.

The company added yesterday that it would keep a “significant, more focused and strengthened presence” in the UK North Sea, with production from the Schiehallion redevelopment and Clair Ridge project set to come on stream.