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Shell offloads $4.7 billion of energy assets after BG deal to become leaner
Royal Dutch Shell has sold North Sea and Thai energy assets for $4.7 billion (3.7 billion euros) to become leaner and reduce debt after buying rival BG Group, it said Tuesday.
Shell offloaded its stake in Bongkot, an offshore Thai gas field, to Kuwait Petroleum Corp for $900 million, the Anglo-Dutch group said in a statement.The energy major that last year bought BG Group for $69 billion agreed also to sell some North Sea assets to oil exploring minnow Chrysaor for up to $3.8 billion.
Royal Dutch Shell’s ‘A’ share price climbed 1.4 percent on the London stock market, which was up overall in afternoon deals.
The Chrysaor deal more than halves Shell’s production in the North Sea, where resources are fast declining.
But it allows Shell to focus on larger and more profitable fields, according to Platts analyst Nick Coleman.
“The oil majors have other fish to fry in Brazil or Abu Dhabi — with big projects which will make a difference in their balance sheets,” Coleman told AFP.
“They don’t have the time nor dedication for smaller oil fields projects” like those being sold in the North Sea.
Shell last year said it would seek to sell 10 percent of group oil and gas output under a plan to sell $30 billion of assets.
“The (latest) sale helps Shell focus on newer growth projects in the North Sea and gives away smaller, older fields and this makes it more focused,” Brewin Dolphin analyst Iain Armstrong told Bloomberg News.
“It’s money in the bank for Shell which helps reduce debt. They are well on their way to meet the big $30 billion target,” he added.
Shell will sell its entire holdings in nine North Sea oil fields plus a smaller stake in a tenth 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 percent stake in the Schiehallion field.
– ‘Clear momentum’ –
“This deal shows the clear momentum behind Shell’s global, value-driven $30bn divestment programme,” said Shell’s Chief Financial Officer Simon Henry.
“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 simplify 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 $3.0 billion, plus a payment of up to $600 million between 2018-2021 subject to commodity prices, with potential further payments of up to $180 million for future discoveries.
Shell’s share of total production from the fields comprised about 115,000 barrels of oil equivalent per day (boepd) in 2016. That was 54 percent of its total North Sea daily oil and gas output of 211,000 boepd.
The company added Tuesday it would retain a “significant, more focused and strengthened presence” in the UK North Sea, as it re-shapes its business. John Matuszak Womens Jersey
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