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Baku, January 31, AZERTAC
Shell has agreed to sell a package of UK North Sea assets to Chrysaor for a total of up to $3.8bn, including an initial consideration of $3.0bn 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.
The package of assets consists of 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.
Based on the initial consideration received, Shell expects to record an accounting gain on sale against the values of both the Shell and former BG assets included in the package.
The decommissioning costs associated with the package are currently expected to be $3.9bn, of which Shell will retain a fixed liability of $1bn and Chrysaor will assume the remaining liability.
The deal is subject to partner and regulatory approvals, with completion expected in the second half of 2017. The transaction’s effective date is 1 July 2016.
The package represents total production of some 115kboe/d (Shell share) in 2016. Shell’s total UK North Sea production during 2016 was around 211kboe/d. Following completion, Shell will retain a significant, more focused and strengthened presence in the UK North Sea, with production from the Schiehallion redevelopment and Clair Ridge project expected to come onstream.
On completion, around 400 staff are expected to transfer to Chrysaor, subject to a detailed scoping exercise and staff consultation, on their existing terms and conditions of employment.
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.”
AZERTAG.AZ :Shell to sell UK North Sea oil fields for $3.8 billion
