Shell Fields on Sale Worth $4.7 Billion

Royal Dutch Shell Plc, looking to pare debt swollen by last year’s acquisition of BG Group Plc, accelerated its drive to shed assets on Tuesday by agreeing to the sale of fields in the North Sea and Thailand for as much as $4.7 billion.

The disposals include the sale of about half the company’s North Sea oil and gas assets for as much as $3.8 billion to Chrysaor Holdings Ltd., Shell said, Bloomberg reported.

Earlier Tuesday, Europe’s largest oil producer agreed to sell its stake in an offshore Thai gas field to a unit of Kuwait Petroleum Corp. for $900 million.

Shell piled up borrowings following its biggest-ever acquisition, the $54 billion purchase of BG, and needs to hit disposal targets to stave off credit rating reviews and maintain dividend payouts. While Chief Executive Officer Ben van Beurden has made debt reduction a top priority, Shell missed its target for asset sales last year as low oil prices depressed valuations.

“The sale helps Shell focus on newer growth projects in the North Sea and gives away smaller, older fields and this makes it more focused,” said Iain Armstrong, a London-based analyst with Brewin Dolphin Ltd. “They are well on their way to meet the big $30 billion target now.”

Shell had almost $78 billion of net debt at the end of September. Net debt to capital, also called gearing, was at 29.2% compared with 12.7% a year earlier, and is among the highest for European oil companies.

The deal with Chrysaor includes an initial consideration of $3 billion and a payment of up to $600 million between 2018 and 2021 subject to commodity prices, with potential further payments of up to $180 million for future discoveries. 

The deal is subject to partner and regulatory approvals, with completion expected in the second half of 2017.