Royal Dutch Shell is about to close a deal to sell a major portion of its assets in the North Sea to Chrysaor for approximately US$3 billion. Financial experts believe that this is an attempt by Shell to reduce its debt after purchasing BG Group.
Chrysaor is backed by private equity and focuses on oil production in the North Sea. The acquisition of the assets will see the oil and gas contractor acquire older as well as newer oil rigs and platforms. Industry analysts believe that this sale will rejuvenate North Sea oil production. Since the late 1990s, production in the North Sea has suffered with production steadily declining.
Other oil and gas contractors and companies are keeping a close watch on this deal. Should the deal come through as anticipated, it will open up the industry. Like Shell, other oil and gas companies will be more willing to buy and sell assets not just in the North Sea but also in other oil-producing regions of the world.
Along with the North Sea assets, Chrysaor will also take over several hundred employees from Shell and BG Group who work on these platforms.
Chrysaor has already received approval from the Oil and Gas Authority, and this deal will make the company one of the major operators in the North Sea, a region where leading oil companies such as BP and Shell are struggling to make profits. In fact, in November 2016, OMV, an oil major from Austria, sold its North Sea unit to Siccar Point Energy for US$1 billion.
Besides acquiring Shell’s platforms in the North Sea, Chrysaor will also get access to innovative technology to decommission platforms and other related infrastructure once the oilfields reach the end of their production lifecycle. This process is usually quite expensive and complicated. Therefore Chrysaor will be looking to benefit from Shell’s expertise in the area.