UK supermajor Shell is evaluating the sale of two key US Gulf of Mexico assets that could raise as much as $1.5 billion, according to Reuters citing people familiar with the issue.
Shell has begun soliciting buyer interest for its Auger hub and its 37.5% stake in the Hess-operated producing Conger field, having hired an investment bank to run an auction process which reportedly was initiated in recent weeks.
Shell is said to be targeting a valuation of around $1.5 billion from the sale of the assets, which have a combined output of around 50,000 barrels per day, two of Reuters’ three sources claimed.
In 1994, Auger hosted the world’s first tension leg platform. When production from the mature field located in a water depth of 2720 feet started to decline, Auger looked destined for decommissioning.
But in 2010, Shell’s engineers discovered the Cardamom field which was exploited via Auger, adding an extra 50,000 barrels of oil equivalent per day at its peak after coming on stream in 2014 — making it Shell’s largest net producer in the Gulf of Mexico.
The Conger field, where Hess is also partnered by Occidental, is a deep-water conventional oil and gas field. Peak production of approximately 34,260 bpd of oil and condensate and 125 million cubic feet per day of natural gas was achieved in 2014, according to GlobalData.
Shell told Upstream it had “no comment” regarding the potential sale of some of its US Gulf assets.
Energy giant Shell is not turning its back on the US Gulf, where it is developing projects such as its Whale field and Sparta — formerly North Platte, which it recently acquired from Equinor — that will add to its existing production there.
Shell has been streamlining its E&P portfolio in recent years to focus on nine core areas — Brazil, Brunei, the Mexican and US areas of the Gulf of Mexico, Kazakhstan, Malaysia, Nigeria, Oman, the Permian shale basin in the US and the UK North Sea — which as of October 2020 generated 80% of cashflows in the company’s upstream business.
There is no guarantee that Shell would secure a sale of its Auger and Conger stakes, the Reuters sources cautioned.
The operator is reportedly also looking to divest stakes in two mature production clusters in the UK southern North Sea.
However, last month Shell confirmed it had suspended plans to sell onshore oil assets in Nigeria to comply with a Nigerian Supreme Court ruling that it had to wait for the outcome of an appeal over a 2019 oil spill.
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