Shell set to sell $3
billion North Sea assets to Chrysaor
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[January 27, 2017]
By Ron Bousso and Clara Denina
(Reuters) - Royal Dutch Shell is nearing the sale of a large part of its
North Sea oil and gas assets to private equity-backed Chrysaor for $3
billion, banking sources said, marking a milestone in its drive to
reduce debt after buying BG Group.
Chrysaor, a North Sea-focused oil company backed by private equity fund
EIG Partners, will acquire from Shell a mix of older fields, new
developments and infrastructure in a move analysts say could breathe new
life into one of the world's oldest offshore basins where production has
been in a steady decline since the late 1990s.
The anticipated deal in what is a relatively high-cost region has been
seen by the industry as a litmus test for the sector's appetite for
buying and selling oil and gas fields, known as upstream, as it slowly
emerges from a brutal two-and-a-half year downturn. It could now unlock
other deals in the North Sea and other regions.
Shell and Chrysaor declined to comment.
The deal is expected to be announced in the coming days to coincide with
Shell's full-year results on Feb. 2, several sources said.
Chrysaor will take charge of hundreds of Shell and former BG employees
that work on the platforms.
It will also become operator of several fields, highlighting the
changing landscape in the North Sea where oil majors such as Shell and
BP <BP.L> are finding it harder to make profits.
In November, Austrian oil and gas group OMV <OMVV.VI> agreed to sell its
UK unit to private-equity backed Siccar Point Energy for $1 billion.
Chrysaor has been given the green light by Britain's Oil and Gas
Authority regulator to operate fields in the North Sea. The deal also
includes an "innovative" structure to tackle the expensive and complex
decommissioning of platforms and infrastructure once production in
fields is ended, sources said.
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Logos of Shell is pictured at a gas station in the western Canakkale
province, Turkey April 25, 2016. REUTERS/Murad Sezer/File Photo
the Anglo-Dutch company, the deal could kick start a string of other upstream
sales that have struggled to attract interest throughout the downturn to help it
meet its $30 billion disposal target by around 2018 following the $54 billion
acquisition of BG Group in February 2016.
Several companies have looked at Shell's North Sea portfolio in recent months
including A.P. Moller-Maersks and private equity fund Carlyle Group, according
to banking sources.
Shell's asset bundle includes a non-operating stake in Buzzard north of
Aberdeen, a relatively new field that feeds into the global Brent oil benchmark
and a share in Shell's 55 percent holding in the BP-operated Schiehallion
oilfield some 110 miles (180 km) west of the Shetland Islands.
Other assets include the Nelson, Armada, Everest, Lomond and J Block fields, and
Shell's stake in the Statoil-led Bressay development, according to banking
Shell has sold or agreed to sell around $7.8 billion of assets since announcing
the deal in April 2015, though the majority of them were in the refining sector
(Editing by Jason Neely and David Evans)
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