LONDON, UK / ACCESSWIRE / June 20, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for Royal Dutch Shell PLC (NYSE: RDS-A) (NYSE: RDS-B), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=RDSA. The European Commission (EC) on June 16, 2017, announced that it has cleared the sale of Northern North Sea petroleum business of the Royal Dutch Shell to Chrysaor Holdings Limited, part of EIG Global Energy Partners. The EC concluded that the deal would not raise any competition concerns as there is very limited overlap of business between Shell and Chrysaor and that there are many strong competitors in the said business. The ruling is with regards to Shell’s sale of its North Sea based assets in January 2017 to Chrysaor Holdings Limited, part of EIG Global Energy Partners for approximately $3.8 billion. For immediate access to our complimentary reports, including today’s coverage, register for free now at:
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Details of Shell’s deal with Chrysaor
In January 2017, Shell had announced the sale of its North Sea based assets to Chrysaor Holdings Limited, part of EIG Global Energy Partners for approximately $3.8 billion. The North Sea Assets included Shell’s interests in Buzzard, Beryl, Bressay, ElginFranklin, JBlock, the Greater Armada cluster, Everest, Lomond and Erskine, plus a 10% stake in Schiehallion. Chrysaor would pay $3 billion at the start of the deal followed by a payment of up to $600 million between 2018-2021, depending on the commodity prices. Shell is also expected to get an additional $180 million from Chrysaor against any future discoveries in the region.
As per the agreement Chrysaor has also agreed to take over a majority of the decommissioning costs of the North Sea assets which total approximately $3.9 billion. Out of this Shell will only keep a fixed liability of $1 billion.
The North Sea assets had a net production of around 115,000 barrels of oil equivalent per day in FY16. The sale represents a 55% reduction of Shell’s total production in the North Sea region, which was 211,000 barrels per day in FY16. As per the agreement, the staff of nearly 400 employees at these sites would be transferred to Chrysaor. The divestment was expected to close in H2 2017.
The completion of the deal would catapult Chrysaor into one of the largest producers of oil and gas in the UK. The deal is expected to add proven and probable reserves of around 350 million boe (barrels of oil equivalent) to Chrysaor’s existing reserves base. Chrysaor expects that the unit operating costs across the acquired portfolio will be under $15 per barrel.
The asset sale would allow Shell to concentrate on its other assets in the North Sea, i.e. the Schiehallion redevelopment and Clair Ridge project.
Established in 2007, Chrysaor is a private Company that deals in exploration and production of oil and gas resources and is based in London UK. Chrysaor is backed by Harbour Energy, Ltd, an energy investment vehicle formed by private investment firm EIG Global Energy Partners and the Noble Group to take control and near control of investments in high-quality upstream and midstream Companies, primarily outside of the United States.
Part of Shell’s strategic business plan post-merger with BG Group
The divestment was part of Shell’s strategic business plan to streamline its portfolio after completing the takeover of rival BG Group in February 2016. As part of this strategy Shell had sold many of its upstream assets immediately after the merger with BG. Some of the asset sale agreements include the following:
- In January 2017, Shell had announced the sale of its subsidiary Companies Shell Integrated Gas Thailand Pte Limited and Thai Energy Co. Limited, to KUFPEC Thailand Holdings Pte Limited, a subsidiary of Kuwait Foreign Petroleum Exploration Company for $900 million.
- In August 2016, Shell sold off its assets in Gulf of Mexico to EnVen Energy Corporation for $425 million cash plus royalty interests.
- In October 2016, Shell sold off its acreage in Western Canada to Tourmaline Oil Corp. for approximately $1 billion. The sale was done through its affiliate Shell Canada Energy.
Last Close Stock Review
At the closing bell, on Monday, June 19, 2017, Royal Dutch Shell’s stock marginally slipped 0.59%, ending the trading session at $54.13. A total volume of 1.94 million shares have exchanged hands. The Company’s stock price advanced 3.28% in the last three months, 0.82% in the past six months, and 4.78% in the previous twelve months. The stock is trading at a PE ratio of 28.96 and has a dividend yield of 6.95%. The stock currently has a market cap of $219.90 billion.
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