Shell closes sale of UK North Sea assets

Oil major Shell has completed the sale of a package of UK North Sea assets to the UK-based independent oil & gas company, Chrysaor.

The assets were sold for a fee of up to $3.8bn, including an initial consideration of $3bn and a payment of up to $600m between 2018- 2021 subject to commodity price, with potential further payments of up to $180m for future discoveries.

This sale was announced on January 31, 2017, as part of Shell’s previously announced $30 billion divestment program. and has an effective date of July 1, 2016. Completion follows receipt of all necessary regulatory and partner approvals.

The package of assets consists of Shell’s interests in Buzzard, Beryl, Bressay, Elgin-Franklin, J-Area, the Greater Armada cluster, Everest, Lomond and Erskine, plus a 10% stake in Schiehallion. Shell retains a significant, more focused and strengthened presence in the UK North Sea, to which it remains committed, the oil giant said on Wednesday.

According to the company, 253 staff transferred from Shell to Chrysaor upon completion of the transaction. In 4Q 2017, Shell will record an accounting gain on sale of $1bn against the values of both the Shell and former BG assets included in the package.

“Completion of this deal shows the clear momentum behind Shell’s $30bn divestment program and is in line with Shell’s drive to simplify the upstream portfolio and re-shape the company into a world class investment,” Shell concluded.

Chrysaor said in a separate statement on Wednesday that production from the acquired assets is forecast to average just under 120,000 net barrels of oil equivalent per day for 2017, with current unit operating costs running at less than $15 a barrel.

The company now has some 400 employees, with approximately 200 based in its operations center at The Capitol Building in Aberdeen, 150 working offshore and 50 at its corporate headquarters in London.

Phil Kirk, Chief Executive of Chrysaor, said: “With the acquisition of this package of high quality, low cost production assets, Chrysaor becomes the leading independent in the UK North Sea.”

Kirk added: “We are already working hard to mature drilling opportunities in the Chrysaor-operated assets, secure further third party business for the hub assets, and actively support viable development initiatives proposed by our partner-operated assets.”

Linda Z. Cook, Chairman of Chrysaor, said: “With improving operating costs, competitive fiscal terms and a world class skills base, the North Sea is undergoing a period of rejuvenation. Through its acquisition of the Shell portfolio Chrysaor is now firmly placed to take advantage of this change. Harbour Energy is pleased to provide funding for this acquisition and to continue our active support of Chrysaor in pursuit of its goal to deliver material growth and value.”

Offshore Energy Today Staff

Map of the assets