Chrysaor snaps up $3.8 billion in Shell's North Sea assets

Despite divesting part of its North Sea assets to Chrysaor, Royal Dutch Shell remains committed to the UK North Sea.

Slimline Shell sells almost half North Sea assets

North Sea Oil Rig by Gary Bembridge https://creativecommons.org/licenses/by/2.0/

Relocate Editorial

31 January 2017

Royal Dutch Shell is to sell up to $3.8 billion (£3.06 billion) of North Sea assets to oil exploration company Chrysaor as part of a continuing divestment programme.Some 400 staff are expected to transfer to Chrysaor as Shell sells its interests in the Buzzard, Beryl, Bressay, Elgin-Franklin, J-Block, the Greater Armada cluster, Everest, Lomond and Erskine fields, plus a 10 per cent stake in the Schiehallion field to the west of the Shetland Isles.Once the deal is complete, Shell will have almost halved its North Sea interests while Chrysaor, which is backed by private equity firm EIG, will become one of the UK's largest oil and gas producers.

Shell sells Bongkot gas field to the Kuwait Foreign Petroleum Exploration Company

In a separate deal, Shell - which last year completed a $54 billion buyout of the exploration company BG Group and has now embarked on a cost-cutting drive and a $30 billion divestment initiative - announced it had sold its stake in the Bongkot gas field in Thailand to the Kuwait Foreign Petroleum Exploration Company for $900 million.

Shell remains committed to the North Sea

Despite the sale to Chrysaor, which comprises an initial payment of $3 billion with future payments dependent on commodity prices and future discoveries, Andy Brown, Shell's upstream director, insisted the company remained committed to the North Sea."Shell has a long and proud history in the UK North Sea, to which we remain committed," he said. "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 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."

Chrysaor's exploration and production plans

Chrysaor said it planned to establish the UK's leading independent exploration and production company. Phil Kirk, the company's CEO, said: "We do have six or eight wells we would be looking to sanction that the vendor was probably not looking to sanction. 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."Chrysoar will get a $1 billion injection from EIG investment vehicle Harbour Energy to help fund the deal. Linda Cook, Harbour’s managing director, will become chairman of the oil company. “The North Sea has undergone a revolution in recent times with operating costs falling to competitive economic levels, and we believe this signals a moment for a generational change in the basin,” she said.“We look to acquire further assets that are material to our business as we bring to bear energy, skills and additional investment to enable the company to perform to full potential."