Shell sells North Sea oil assets for $3.8 billion to Chrysaor

Energy - Mohit Shah - Jan 31,2017

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shell sells north sea oil assets for 38billion to chrysaor

Royal Dutch Shell has agreed to sell a set of oil and gas fields to Chrysaor, a small firm backed by US private equity company, EIG Partners.

The deal has been fixed for $ 3.8 billion which accounts for more than half of Shell's production in the region of North Sea.  

Oil majors such as Shell and BP have fought to generate profits from this section. This agreement will pump in life into the ageing North Sea where production has gradually deteriorated since the late 1990s.

Industry executives and bankers hope the Shell deal will crack further mergers and acquisitions in the North Sea as the steadying oil price draws more private equity interest. 

Earlier on Tuesday, Shell had announced the transaction of a stake in Thailand's Bongkot gas field to Kuwait Foreign Petroleum Exploration Company for a value of $900 million.

Simon Henry, Shell’s chief financial officer, stated that the transactions disclosed “clear momentum” behind efforts to simplify the group’s extensive portfolio, adding to a series of recent deals from refining assets in Japan to shale resources in Canada.

The Chrysaor deal has turned up to be biggest in the North Sea for years and includes an opening consideration of $3bn and a payment close to $600m between 2018-2021 issued to commodity prices, with further possible payments of up to $180m designated for future discoveries.

The package includes Shell’s interests in nine oil and gasfields — Beryl, Buzzard, Bressay, Elgin-Franklin, Greater Armada, J-Block, Everest, Erskine and Lomond— along with a 10 per cent stake in BP’s Schiehallion field situated west of the Shetland Islands.

Shares in Shell rose considerably to £22.56 after the news of the agreement was declared on Tuesday morning.

The combination of the North Sea and Thai deals will take the running total from Shell’s disposals arrangements to around $10bn.