Anglo-Dutch supermajor Shell has completed the sale of its upstream assets in Egypt’s Western Desert to a consortium of Egyptian player Cheiron Petroleum Corporation and the UK’s Cairn Energy.
The sale was completed at a “base consideration of $646 million and additional payments of up to $280 million between 2021 and 2024, contingent on the oil price and the results of further exploration", Shell said on Friday.
International oil and gas giants are increasingly evaluating their global upstream assets, as the energy transition gains momentum, which is likely to shore up merger and acquisition activity in the sector.
The sale of Shell’s upstream assets in Egypt was first announced in March.
The Egyptian assets comprise 13 concessions, including five exploration areas owned and operated by Bapetco, a 50:50 venture between Shell and the Egyptian General Petroleum Corporation.
Shell’s working interest production from the concessions in 2020 averaged 83,000 barrels of oil equivalent per day, comprised of 37% liquids and 63% gas.
Cairn chief executive Simon Thomson earlier described Egypt as a “very attractive investment destination”, adding the acquisition is an important strategic step to expand and diversify the company's production base, including through exploration.
Thomson had said Cairn sees the potential over the next two to three years to increase its net share of production to 50,000 barrels per day of oil “and beyond”.
Shell said in closing the transaction the company “is refocusing its business in Egypt” on its “existing infrastructure position in the West Delta Deep Marine, the Harmattan Deep Project and exploration acreage in seven new blocks in the Nile Delta, West Mediterranean and the Red Sea".
In the midstream sector, the company is continuing its presence through its Egyptian LNG joint venture and downstream through Shell Lubricants Egypt, it said.
Shell announced the agreed sale of its Permian basin assets to ConocoPhillips last week, for a total price of $9.5 billion.
Proceeds will be used to fund $7 billion in shareholder handouts, with the remainder used for strengthening of the balance sheet, the company said.