Royal Dutch Shell Plc (NYSE: RDS.A) continues to chip away at a massive divestment goal with the sale of Gulf of Mexico (GoM) assets to an affiliate of Houston’s EnVen Energy Corp. for $425 million.
On Aug. 29, Shell Offshore Inc., an affiliate of the Netherlands-based company, said it entered an agreement to sell its Brutus/Glider assets to EnVen, a private upstream E&P with GoM operations.
The sale includes 100% of Shell’s record title interests in Green Canyon blocks 114, 158, 202 and 248, which has combined production of about 25,000 barrels of oil equivalent per day (boe/d). Tudor, Pickering, Holt & Co. (TPH) estimates the transaction equates to $17,000 per boe/d.
“It is a relatively low price but likely due to a low reserve life,” TPH said in an Aug. 30 report. Assuming a five-year reserve life, the transaction implies about $9 per boe, the firm said.
Shell, which made one of the largest oil and gas mergers of the last decade with the February acquisition of BG Group, intends to divest $30 billion of its portfolio by 2018. The company’s merger with BG was worth about $70 billion, mostly in stock.
The company’s divestment plans include between $6 billion to $8 billion of asset sales by year-end. So far, TPH estimates it has agreed to sell close to $4 billion of its assets.
Up to 10% of Shell’s oil and gas production is earmarked for sale, including exiting several countries, midstream assets and downstream positions.
Simon Henry, Shell’s CFO, emphasizes the asset sales will be driven by value, not time.
“As we’ve said before, we’re not planning for asset sales at giveaway prices,” Henry said during the company's second-quarter earnings call on July 28. “There’s no reason today to think that the $30 billion figure won’t be achieved.”
The Brutus/Glider asset sale consists of the Brutus tension leg platform (TLP), the Glider subsea production system and the oil and gas lateral pipelines used for TLP production. The sale is expected to close in October.
Shell is also looking to sell its overriding royalty interests in 17 leases in the U.S. GoM with an estimated 10-year revenue stream of $450 million. The assets are up for sale through EnergyNet, with sealed bids due Sept. 22.
In addition, the company is said to be in the process of selling a large portfolio of fields in the U.K. North Sea, according to a Reuters report on Aug. 30.
Emily Moser can be reached at emoser@hartenergy.com.
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