Shell Sells $4.7 Billion of Fields as Disposals Accelerate

By Sarah Oliver,
Money and Investing Writer

Royal Dutch Shell Plc (NYSE: RDS.A) has decided to sell some of its fields in the North Sea and Thailand in order to aid in the accumulated debt from a past acquisition. Royal Dutch Shell is an Anglo-Dutch company whose headquarters are located in The Netherlands.

According to Fortune Global 500 it was the number one on its list for largest companies. Since 2013 the oil company has suffered through some changes in financing and moved down to number 5 on the list. While this is still a promising position for Shell, the company has decided to make some changes in order to help finance the debt taken on by recent acquisitions. The oil company acquired BC Group Plc, a British oil and Gas company, for about $54 billion in 2015.

Since that acquisition, the company saw debt of $78 billion towards the end of 2016. Shell has been struggling over the past year after missing their target for asset sales, and is hoping that relinquishing some of its assets will aid in the debt incurred.

The sale of assets includes the North Sea oil and gas assets for $3.8 billion to Chrysaor Holdings Ltd., and offshore Thai gas fields to Kuwait Petroleum Corp. for $900 million. Chrysaor is hopeful of more opportunities in the North Sea following the growth of production assets.

The company describes on its website the acquisition to be “A platform for change and growth in the North Sea.” While Shell appears to be limiting their assets, Chrysaor is hoping for continual expansion. This company sees a promising future in the North Sea, especially concerning this purchase which produced about 10 percent of all North Sea production over the past 40 years. The assets relinquished to the company are equivalent to approximately 115,000 barrels of oil. After the deal is complete Chrysaor will become a leading producer of oil and gasoline in the United Kingdom.

It is the hope of the company that selling some of the smaller field will help to focus on the growth of larger fields, to aid in increasing the financial standpoint of the company.
The Chief Financial Officer Simon Henry stated that the move to sell these assets is, “consistent with Shell’s strategy to high-grade and simplify our portfolio following the acquisition of BG.”

Other assets have been sold including a 50 percent stake in a Saudi Arabia joint venture for $820 million, and a stake in a Malaysian liquefied natural gas export plant.

These deals are all part of a plan to bring growth to the company which is aiming for $30 billion in deals by 2018. This “divestment” program poses a promising future for the oil company in the upcoming years.

A version of this article appeared in the Tuesday, February 7th print edition.

Contact Sarah at
sarah.oliver@student.shu.edu

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s