Shell Sells Okea Two Norwegian Assets

Anglo-Dutch major Shell has agreed to sell to newcomer Okea its entire 44.56% interest in Draugen which it operates and its 12.00% interest in Gjoa, both offshore Norway, for Nkr 4.520bn ($553mn), it said June 20. Subject to regulatory approval the deal is expected to complete in Q4 2018 but the effective date is January 1, 2018. 

Okea, founded in 2015 by management and private equity firm Seacrest, specialises in small and mid-sized developments on the Norwegian Continental Shelf, where it says there is a need for a "specialised, lean development and production company to fulfil the value and resource potential."

It said that turning the Yme field from decommissioning to redevelopment demonstrates its business model, repeated again when it bought the ready-to-relinquish Grevling discovery, which is now in planning for development.

This deal will quintuple its resources, from 11mn barrels of oil equivalent (boe) to 55mn boe. The transaction will be financed through a combination of underwritten bond loan and equity. Bangchak Corporation PCL, a Thai downstream oil and gas company, has entered into a strategic partnership with Seacrest Capital Group, and together they will finance the acquisition, Okea said. 

Shell will be responsible for 80% of the estimated NKr1bn after-tax costs of decommissioning, up to an agreed cap; and Okea will assume the remaining liability. Shell's share of the assets’ production was about 25,000 barrels of oil equivalent/day last year, or about 14% of Shell’s Norwegian production. 

“This deal is part of Shell’s global, value-driven $30bn divestment programme and is consistent with our strategy to high-grade and simplify our portfolio,” said Shell’s upstream head Andy Brown. As of January, Shell had announced sales completed worth $26bn, with $4bn more announced, and $2bn more – of which this is one – in the 'well-advanced' category, carrying it over its stated target.

Shell Norway said the deal was a good strategic move for both companies. "Draugen has been a defining asset for Shell in Norway, and we are confident it will prove to be similarly important to Okea as a springboard in further developing their operating capabilities on the NCS," said Shell Norway head, Rich Denny.

It said that it remained committed to Norway, operating Ormen Lange and Knarr and partnering in Troll, Valemon and Kvitebjorn fields. It will drill two exploration wells on the NCS this year. 

Draugen is mainly an oilfield that began producing in 1993, peaked in 2001 and has been declining ever since, with very little associated gas output; Gjoa is a gas field that last year produced 3.65bn m³, according to the Norwegian Petroleum Directorate.