Offshore staff
TRONDHEIM, Norway – A/S Norske Shell has agreed to sell its 44.56% operated interest in the Draugen field in the Norwegian Sea and its 12% stake in the Gjøa field in the North Sea to OKEA for $556 million.
Subject to regulatory approval the deal should be completed in 4Q, with OKEA becoming Draugen’s new operator.
Shell will retain liability for 80% of the field’s anticipated decommissioning costs post-tax up to an agreed cap of $78 million. OKEA will take on remaining liability.
The transferred share of production from the two fields totalled around 25,000 boe/d last year, roughly 14% of Shell’s Norwegian production.
“This deal is part of Shell’s global, value-driven $30-billion divestment program and is consistent with our strategy to high-grade and simplify our portfolio,” said Andy Brown, Shell’s Upstream Director.
Rich Denny, Managing Director of A/S Norske Shell, said: “We are happy that OKEA’s ambition is to uphold and strengthen Draugen’s footprint in mid-Norway.
“They will also be welcoming transferring staff in Kristiansund and Stavanger in order to leverage their substantial experience and competence for the safe and efficient operation of Draugen in the future.
“This deal is a good strategic move for both companies. Draugen has been a defining asset for Shell in Norway, and we are confident it will prove to be similarly important to OKEA as a springboard in further developing their operating capabilities on the Norwegian continental shelf.”
Shell stressed that it remained committed to Norway, operating the offshore Ormen Lange and Knarr fields and partnering in Troll, Valemon, and Kvitebjørn. In addition, the company is drilling two exploration wells on the Norwegian continental shelf this year.
A/S Norske Shell is also technical service provider at the Nyhamna gas processing plant on Norway’s west coast and a partner in the Norwegian full-scale CCS (carbon capture storage) project and CCS test facility at Mongstad.
According to Wood Mackenzie, the deal would push OKEA up to 19th in the rankings of Norwegian producers. It will also lift the company’s net resources from 11 to 53 MMboe, and provides an operations center in Kristiansund.
OKEA, founded in 2015 and headquartered in Trondheim, has hitherto specialized in small and mid-sized developments on the NCS, such as helping turnYme in the North Sea from decommissioning to redevelopment.
It has also acquired theGrevling discovery, now in the development phase, bringing in London-based Chrysaor as a partner.
Draugen, which produces through a concrete gravity base platform, was the first Norwegian Sea development and was one of A/S Norske Shell’s major offshore assets over the last 25 years.
OKEA aims to extend the field’s life into the 2040s through a continued focus on cost efficient operations, developing additional resources within the license, and near-field exploration.
Gjøa, operated by Neptune Energy, brings stable production and substantial subsurface upside, OKEA added, with several tie-in projects committed.
OKEA will use the Kristiansund facility as its operations center for all its projects offshore Norway.
It will finance the transaction through a combination of underwritten bond loan and equity. Bangchak Corporation PCL, a Thai downstream oil and gas company, in partnership with Seacrest Capital Group, will jointly provide the finance.
06/20/2018
