Royal Dutch Shell PLC announced a series of transactions involving the sale of oil and gas assets in the UK North Sea and Thailand worth a total of nearly $5 billion.
Shell is selling much of its UK North Sea assets for $3.8 billion to Chrysaor Holdings Ltd., an oil company backed by Harbour Energy Ltd., the investment branch of EIG Global Energy Partners in Washington, DC.
Separately, Shell also announced the sale of its interest in a Thailand gas field to state-owned Kuwait Foreign Petroleum Exploration Co. for $900 million.
Chrysaor is acquiring a package of North Sea and natural gas assets from Shell UK Ltd. Assets include Shell’s interests in 10 operated and nonoperated fields areas, associated infrastructure, and midstream assets. Collectively, the assets produced 115,000 boed in 2016.
Chrysaor expects closing in the second half. Some 400 Shell employees work on the assets being acquired. The transaction would make Chrysaor one of the largest UK oil and gas producers. Chrysaor executives said they plan drilling to extend the life of fields it will operate.
Terms call for Chrysaor to pay $3 billion upfront and another $600 million during 2018-21 subject to oil prices. Shell agreed to repay up to $100 million to Chrysaor if oil prices fall below a certain level. Terms also call for Shell to receive another payment of up to $180 million if certain exploration milestones are met.
Shell had said in 2016 that it wanted to sell $6-8 billion although it fell short of its goal. The deals announced Jan. 31 mean that Shell now reached negotiated transactions worth about $11 billion.
The North Sea sale is the largest deal yet in Shell’s divestment program.
Shell is selling upstream, downstream, and midstream assets to help pay down debt after its 2016 acquisition of BG Group PLC last year. Shell reported $78 billion in debt as of third-quarter 2016.
Thai deal
KUFPEC Thailand Holdings Pte. Ltd. agreed to buy a stake in Bongkot field from Shell Integrated Gas Thailand and Thai Energy Co. Ltd., which together hold 22.2% stake in Bongkot and adjoining acreage offshore Thailand consisting of Blocks 15, 16, and 17, and Block G12-48.
PTT Exploration & Production operates Bongkot with 44.445% interest. Total SA has 33.3% interest.
“This transaction shows the clear momentum behind Shell’s global, value-driven $30-billion divestment program,” Shell said. The transaction is expected to be completed during the first quarter.
Shell said the announcement had no impact on its other business interests.
Contact Paula Dittrick at [email protected].
