By Sarah Kent and Ian Walker
LONDON-- Royal Dutch Shell PLC is selling a package of assets of assets in the U.K. North Sea to a private-equity backed Chrysaor Holdings Ltd. for up to $3.8 billion, marking an important milestone in the oil giant's substantial divestment plan.
The Anglo-Dutch oil giant is in the process of selling off $30 billion of assets to help pay for its acquisition of smaller rival BG Group last year. It was a transformative deal that boosted Shell's dominant position in global gas markets and snagged it highly attractive deep water oil fields offshore Brazil, but also loaded the company with debt and a commitment to slim down.
The assets disposal program has proved challenging at a time of low oil prices that weighed on deal making across the sector. Last year, Shell announced details of asset sales amounting to over $5 billion, but still fell short of a previously stated goal of disposals worth $6-$8 billion in 2016.
The sale of North Sea assets to Chyrsaor was widely expected to come early this year and marks the largest disposal yet in Shell's divestment program, but its structure illustrates how low oil prices are still affecting the value of deals and how they are structured.
Chrysaor will pay $3 billion upfront and another $600 million between 2018-2021 subject to oil prices. If prices fall below a certain level in that period, Shell will repay up to $100 million to Chrysaor.The deal will bring Chrysaor--an oil-and-gas company backed by EIG Global Energy Partners--production of 115,000 barrels of oil equivalent a day and interests in several North Sea blocks. The company is expected to take on around 400 Shell staff on completion of the deal.
The deal is subject to partner and regulatory approvals, with completion expected in the second half of this year, Shell said.
Write to Sarah Kent at firstname.lastname@example.org and Ian Walker at email@example.com
(END) Dow Jones Newswires
January 31, 2017 03:17 ET (08:17 GMT)
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