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Shell’s sale of Norwegian fields ‘sign of shifting times’ in the region

Publication Date: 05 Dec 2018 - By ReachX Team By ReachX Team
Actionable
Differentiated

Equity Fundamental Commodity Equity EU ex-UK UK Energy

Following the news of Royal Dutch Shell subsidiary Norske Shell completing a deal to exit its operated interest (44.56%) in the Draugen oil field and its non-operated interest (12%) in the Gjøa gas field, offshore Norway, a leading industry analysis firm says the move is indicative of further portfolio rebalancing by oil majors. 

In note to its clients, data and analytics company GlobalData said Shell’s Friday (30 November) divestment was in keeping with completed and announced deals by established oil and gas companies in the North and Norwegian Seas that point to a shift the region is currently experiencing. 

European legacy exploration and production companies (E&Ps) are rebalancing portfolios in the North and Norwegian Seas, with asset sales of more mature fields but also asset acquisitions and investment in upcoming projects, it added. 

“On the other hand, we see that legacy North American E&Ps are indicating a clearer divestment strategy away from the region. As the more established North and Norwegian Sea players rebalance and optimise portfolios, opportunities are presented for developing E&Ps looking to invest in sustaining field production and maximising economic recovery to generate cash flow,” said Daniel Rogers, Upstream Oil & Gas Analyst at GlobalData. 

“These often smaller, developing companies are nimble enough to allocate the right experience and resources to prolong field life and maximize asset value.”

Some instances of asset handovers include EnQuest’s intervention at the Heather field (North Sea). The company brought a fresh perspective as the platform faced decommissioning and following facilities upgrades, workovers and well re-drilling, production levels were doubled from the field. 

More recently, Chrysaor Holdings acquired a stake in the Maria field (North Sea) and conducted a 2018 drilling campaign with an anticipated fivefold increase in oil production from the field by 2020, expecting to bring an additional 10 years of field life.”

 

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