Private equity backed independent Chrysaor says it is already maturing drilling opportunities after completing a deal to buy a major package of UK North Sea assets from Shell for up to US$3.8 billion.
The deal sees Chrysaor become a major independent exploration company company in the UK. Production from the acquired assets is forecast to average just under 120,000 boe/d net for 2017, with current unit operating costs running at under $15/bbl.
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The sale includes an initial consideration of $3 billion and a payment of up to $600 million between 2018-2021, subject to commodity prices, with potential further payments of up to $180 million for future discoveries, Shell said.
The package of assets consists of Shell’s interests in Buzzard (21.7%), Beryl (39.4%), Bressay (18.4%), Elgin-Franklin (14.1%), J-Area (30.5%), the Greater Armada cluster excluding Gaulpe (76.4%), Everest (100%), Lomond (100%) and Erskine (32%), plus a 10% stake in Schiehallion. Chrysaor has assumed operatorship of Armada, Everest and Lomond, while Shell retains a 44.9% stake in Schiehallion.
“Completion of this deal shows the clear momentum behind Shell’s $30 billion divestment program and is in line with Shell’s drive to simplify the upstream portfolio and re-shape the company into a world class investment,” Shell stated.
Announced in January this year, the sale has an effective date of 1 July 2016. In Q4 2017, Shell will record an accounting gain on sale of $1 billion against the values of both the Shell and former BG assets included in the package.
As part of the sale, 253 staff transferred from Shell to Chrysaor. The company now has some 400 employees, with approximately 200 based in its operations center at The Capitol Building in Aberdeen, 150 working offshore and 50 at its corporate headquarters in London.
“With the acquisition of this package of high quality, low cost production assets, Chrysaor becomes the leading independent in the UK North Sea,” said Phil Kirk, chief executive of Chrysaor, in a 1 November statement. “I am excited at the prospect of our highly professional existing and new staff working together with our new licence and supply chain partners to develop and grow the company together." The company is working hard to secure further third party business for the hub assets, and actively support viable development initiatives proposed by its partner-operated assets.
Energy investment firm Harbour Energy provided funding for the transaction.
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