* Deal brings Shell disposal programme close to conclusion
* Noreco will have 36.8 pct stake in Danish UndergroundConsortium
* Consortium has assets in 15 offshore fields
* Noreco shares up 54 pct, Shell dips by 0.4 pct(Adds quotes, financing detail, updates shares)
By Nerijus Adomaitis
OSLO, Oct 17 (Reuters) - Royal Dutch Shell hasagreed to sell its Danish upstream business to Norwegian Energy(Noreco) for $1.9 billion as part of its widerdivestment strategy, the company said on Wednesday.
The sale brings Shell's three-year $30 billon divestmentplan close to its conclusion, having begun the process in 2015after the acquisition of BG Group. Deals so far have includedlarge portfolios in the British North Sea, Gabon, Thailand andCanada.
"Today's announcement is consistent with Shell's strategy tosimplify its portfolio through a $30 billion divestmentprogramme and contributes to our goal of reshaping the companyinto a world-class investment case," Shell's upstream director,Andy Brown, said in a statement.
The latest transaction, for a business that had output of67,000 barrels of oil equivalents per day (boed) last year,would make Noreco the second-largest oil and gas producer inDenmark behind French oil major Total, the Norwegiancompany said.
Noreco said the deal comprised proven and probable (2P)reserves of 209 million barrels of oil equivalents (mmboe) atthe end of last year, 65 percent of which were liquids.
Shares in Oslo-listed Noreco surged 90 percent to 288.50Norwegian crowns ($35.30) on the announcement and closed 54percent up on the day at 231.50 crowns. Shell's shares eased by0.4 percent.
'REVITALISED'
As part of the deal, Noreco will assume all of Shell'sexisting commitments and obligations, including the Tyra fieldredevelopment.
"Noreco expects to maintain strong production in the yearsto come ... As the Tyra hub is being redeveloped, the portfoliowill be revitalised and offer improved economics accompanied byprolonged field life," Noreco added.
DUC partners decided in December to redevelop the Tyra gasfield at a cost of 21 billion Danish crowns ($3.25 billion),prolonging its life and enabling production of more than 200mmboe.
Noreco said funding for the Shell deal would be provided bya private placement of new shares and a convertible bond, aswell as a $900 million loan from BMO Capital Markets, DeutscheBank and Natixis.
The deal gives Noreco a 36.8 percent stake in the DanishUnderground Consortium (DUC), which has assets in 15 offshorefields. Total, which holds 31.2 percent in DUC, agreed on Sept.25 to buy an additional 12 percent stake from Chevron,while state-owned Danish company Nordsofonden has the remaining20 percent.
Noreco's largest shareholders -- CQS, Kite Lake CapitalManagement, Taconic Capital Advisors and funds managed by YorkCapital Management -- will subscribe to the $160 millionconvertible bond and 15.6 million new shares at $22.62 pershare, it added.
The deal is expected to close in the first half of 2019,pending approval by Danish authorities.
Reuters reported in February 2017 that Shell was seeking tosell its stake in the DUC.($1 = 8.1722 Norwegian crowns)($1 = 6.4662 Danish crowns)(Additional reporting by Ron Bousso in LONDONEditing by Louise Heavens and David Goodman)
