LONDON (Alliance News) - Royal Dutch Shell PLC on Tuesday said it will sell a package of UK North Sea assets to Chrysaor for up to USD3.80 billion in total, as it looks to slim-down its portfolio following the takeover of BG Group.
Shell 'A' shares were up 0.4% to 2,163.50 pence per share on Tuesday morning while 'B' shares were up 0.4% to 2,254.50 pence.
Shell will sell its interests in Buzzard, Beryl, Bressay, Elgin-Franklin, J-Block, the Greater Armada cluster, Everest, Lomond and Erskine, plus a 10% stake in Schiehallion. In 2016, Shell's net production from those assets was around 115,000 barrels of oil equivalent per day.
That is comparable to Shell's total production in the UK North Sea over 2016 of 211,000 barrels per day, meaning production in the region is being reduced by 55%.
"Following completion, Shell will retain a significant, more focused and strengthened presence in the UK North Sea, with production from the Schiehallion redevelopment and Clair Ridge project expected to come onstream," said Shell.
In return, Shell will secure an initial payment of USD3.00 billion, a further USD600 million between 2018 and 2021, with potential for a further USD180 million to be paid dependent on future discoveries, Shell said.
"Based on the initial consideration received, Shell expects to record an accounting gain on sale against the values of both the Shell and former BG assets included in the package," said Shell.
Shell completed its GBP35.00 billion takeover of BG Group almost one year ago and is still in the process of streamlining the enlarged portfolio of assets, facilitated through a USD30.00 billion asset sale programme over a three year period.
Chrysaor, a private company formed in 2007 and led by Chairman Linda Cook and Chief Executive Phil Kirk, had set up a new website following the deal with Shell on Tuesday, dedicated to its "platform for change and growth in the North Sea" following the multi-billion dollar deal.
On completion, around 400 staff are expected to transfer to Chrysaor, subject to a detailed scoping exercise and staff consultation, on their existing terms and conditions of employment.
The deal is subject to partner and regulatory approvals, with completion expected in the second half of 2017. The transaction's effective date is from the start of July, 2016.
The decommissioning package for the assets in question is currently forecast to be USD3.90 billion. Following the deal, Shell will retain a fixed liability of USD1.00 billion, with Chrysaor assuming the rest.
Earlier on Tuesday Shell said it had reached a deal to sell its stake in the Bongkot gas field in Thailand.
Shell will sell its 22.22% stake in the field, held through its Shell Integrated Gas Thailand Pte Ltd and Thai Energy Co Ltd subsidiaries, for USD900.0 million to KUFPEC Thailand Holdings Pte Ltd, a unit of Kuwait Foreign Petroleum Exploration Co.
The assets sold include blocks 15, 16 and 17 and block G12/48 on the field.
Shell's partners on the field are Thai state-owned oil and gas group PTT Exploration and Production Public Co Ltd and France's Total SA.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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