North Sea, Malaysia properties sold
Shell (ticker: RDS) continued its divestiture program today, selling assets in the North Sea and Malaysia for a combined $1.3 billion.
Shell is simplifying its position in the North Sea, selling its interests in two fields to OKEA, a Norwegian offshore operator. Shell will sell its entire interest in the Draugen field, 44.56%, and 12% interest in the Gjoa field for a combined $556 million. Shell is currently the operator of Draugen, so OKEA will assume this role when the acquisition is completed.
Shell’s share of these assets produced about 25 MBOEPD in 2017, which is 14% of the company’s total Norwegian production last year.
Shell will receive $556 million in cash this year, but will eventually pas part of this sum back to OKEA. The assets sold have decommissioning costs estimated at $120 million after tax. Shell will retain 80% of this liability, and will pay this share when OKEA decommissions the fields.
OKEA reports the Draugen field was the first Norwegian Sea development and has been a flagship play for 25 years. The company intends to extend the field life into the 2040s through further exploration of nearby plays.
Malaysia LNG stake sold for $750 million
Shell also divested a portion of its Asian properties today, as the company completed the sale of its equity stake in Malaysia LNG. The Sarawak State Financial Secretary (SFS) paid Shell $750 million for Shell’s 15% stake in the Tiga portion of Malaysia LNG.
The Malaysia LNG complex is one of the largest LNG exporting facilities in the world, with 25.7 MTPA of capacity, large enough to rival the largest planned American LNG facilities. The Tiga portion of the facility accounts for 7.7 MTPA of liquefaction capacity, meaning SFS purchased a stake equal to 1.15 MTPA.
This ends Shell’s involvement with Malaysia LNG, the company has also previously been a part of two other portions of the facility.
$3 billion left to sell in $30 billion program
Shell is currently in the process of a massive $30 billion divestiture program, which it began in 2015 in the wake of its $70 billion merger with BG Group. Reuters estimates the company has sold about $27 billion in assets over the past three years, meaning the divestiture program is nearly complete.
