Calendar An icon of a desk calendar. Cancel An icon of a circle with a diagonal line across. Caret An icon of a block arrow pointing to the right. Email An icon of a paper envelope. Facebook An icon of the Facebook "f" mark. Google An icon of the Google "G" mark. Linked In An icon of the Linked In "in" mark. Logout An icon representing logout. Profile An icon that resembles human head and shoulders. Telephone An icon of a traditional telephone receiver. Tick An icon of a tick mark. Is Public An icon of a human eye and eyelashes. Is Not Public An icon of a human eye and eyelashes with a diagonal line through it. Pause Icon A two-lined pause icon for stopping interactions. Quote Mark A opening quote mark. Quote Mark A closing quote mark. Arrow An icon of an arrow. Folder An icon of a paper folder. Breaking An icon of an exclamation mark on a circular background. Camera An icon of a digital camera. Caret An icon of a caret arrow. Clock An icon of a clock face. Close An icon of the an X shape. Close Icon An icon used to represent where to interact to collapse or dismiss a component Comment An icon of a speech bubble. Comments An icon of a speech bubble, denoting user comments. Ellipsis An icon of 3 horizontal dots. Envelope An icon of a paper envelope. Facebook An icon of a facebook f logo. Camera An icon of a digital camera. Home An icon of a house. Instagram An icon of the Instagram logo. LinkedIn An icon of the LinkedIn logo. Magnifying Glass An icon of a magnifying glass. Search Icon A magnifying glass icon that is used to represent the function of searching. Menu An icon of 3 horizontal lines. Hamburger Menu Icon An icon used to represent a collapsed menu. Next An icon of an arrow pointing to the right. Notice An explanation mark centred inside a circle. Previous An icon of an arrow pointing to the left. Rating An icon of a star. Tag An icon of a tag. Twitter An icon of the Twitter logo. Video Camera An icon of a video camera shape. Speech Bubble Icon A icon displaying a speech bubble WhatsApp An icon of the WhatsApp logo. Information An icon of an information logo. Plus A mathematical 'plus' symbol. Duration An icon indicating Time. Success Tick An icon of a green tick. Success Tick Timeout An icon of a greyed out success tick. Loading Spinner An icon of a loading spinner.

Shell agrees £3bn sale of North Sea assets to Chrysaor

Shell news
Shell news

Shell has agreed to sell a set of UK North Sea assets to Chrysaor for up to $3.8billion (£3billion).

The package includes Shell’s interests in Buzzard, Beryl, Bressay, Elgin-Franklin, J-Block, the Greater Armada cluster, Everest, Lomond and Erskine, plus a 10% stake in Schiehallion.

They contributed more than half of Shell’s UK North Sea production last year.

The deal consists of an initial consideration of £2.4billion and a payment of up to £480million between 2018 and 2021, subject to commodity prices.

A further £145million could also be due if additional discoveries are made on the acreage.

The decommissioning bill for the assets is expected to come to £3.1billion. Shell said it would retain a fixed liability of £800million and Chrysaor would take on the remaining costs.

The transaction is expected to go through in the second half of 2017, subject to partner and regulatory approvals.

About 400 staff members would then transfer to Chrysaor, which will assume operatorship of Armada, Everest and Lomond.

Chrysaor said it would receive an investment of up to £800million from Harbour Energy – an investment vehicle of EIG Global Energy Partners – to support the acquisition.

A syndicate of international banks will provide a reserves-based loan of up to £1.2billion.

Shell insisted it would retain a “significant, more focused and strengthened presence in the UK North Sea”, despite the sale.

It is currently working to get production from the Schiehallion redevelopment and Clair Ridge project onstream.

Read: BP buys, while Shell sells: a recap of recent deal making by the majors

Andy Brown, Shell’s upstream director, said: “Shell has a long and proud history in the UK North Sea, to which we remain committed. This deal complements the great strides we have made over the last two years in improving the competitiveness of our UK upstream business.

“We believe this deal is a vote of confidence in the UK North Sea and offers proof that the industry’s increasing competitiveness, and improvements to the fiscal and regulatory regime, are starting to produce positive results. It will deliver value to Shell, Chrysaor and the UK as a whole, enabling us to continue to strengthen and optimise our UK portfolio and providing a springboard for Chrysaor to bring new investment and growth into the basin.

“It also contributes to the UK’s goal of maximising economic recovery of oil and gas from the UK North Sea, which will continue to be a source of energy, and revenue, for the country for many years to come.”

Simon Henry, Shell’s chief financial officer, said: “This deal shows the clear momentum behind Shell’s global, value-driven $30bn divestment programme. 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.

“Importantly, the value here represents a profit against the book values of the assets, and a breakeven oil price above that for the BG acquisition.”

Chrysaor chief executive Phil Kirk, who is also a current co-chair of Oil and Gas Authority UK exploration board, said: “We are acquiring a high quality package of assets which combine low cost production, a substantial reserves and resources base with strong cash flows and a highly competent and skilled workforce.

“These assets, combined with our own experience and the outstanding team who will transfer from Shell, provide an excellent platform for change and growth in the North Sea.

“We look forward to working with Shell, with our future colleagues and other stakeholders to complete this transaction.”

Read: BP buys, while Shell sells: a recap of recent deal making by the majors


Recommended for you

More from Energy Voice

Latest Posts