LONDON Jan 31 Royal Dutch Shell has
agreed to sell a package of oil and gas fields to private
equity-backed Chrysaor for $3.8 billion, giving the Anglo-Dutch
group a major boost in its drive to reduce debt following the
acquisition of BG Group.
The deal, which accounts for more than half of Shell's
production in the North Sea, will breathe new life into the
ageing North Sea where production has steadily declined since
the late 1990s and where oil majors such as Shell and BP have
struggled to generate profits.
Shell earlier on Tuesday announced the sale of a stake in
Thailand's Bongkot gas field to Kuwait Foreign Petroleum
Exploration Company for $900 million.
The Anglo-Dutch company said in a statement the North Sea
deal included an initial consideration of $3 billion and 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.
Reuters reported on the nearing deal last week.
The deal is subject to partner and regulatory approvals,
with completion expected in the second half of 2017.
Chrysaor, led by veteran North Sea executive Phil Kirk and
backed by private equity funds Harbour Energy and EIG Global
Energy Partners, will become the largest independent operator in
the North Sea after the deal's completion.
"This acquisition reflects Chrysaor's and Harbour's belief
that the UK North Sea has material future potential for oil and
gas production," Kirk said in a statement.
The package includes Shell's interests in Buzzard, north of
Aberdeen, a relatively new field that feeds into the global
Brent oil benchmark, as well as a 10 percent stake in the
BP-operated Schiehallion oilfield some 110 miles (180 km) west
of the Shetland Islands.
Other fields include Beryl, Bressay, Elgin-Franklin,
J-Block, the Greater Armada cluster, Everest, Lomond and
Erskine, Shell said.
Around 400 staff are expected to transfer to Chrysaor on
completion of the deal.
The assets represent some 115,000 barrels of oil equivalent
of production per day (boe/d), more than half of Shell's total
UK North Sea production of 211,000 boe/d last year.
"This deal shows the clear momentum behind Shell's global,
value-driven $30 billion divestment programme. It builds on
recent upstream divestments in the Gulf of Mexico and Canada,"
Shell Chief Financial Officer Simon Henry said in a statement.
"It is also consistent with Shell's strategy to high-grade
and simplify our portfolio following the acquisition of BG," he
(Reporting by Ron Bousso; Editing by Mark Potter)