Shell is exiting the Danish North Sea consortium and has agreed to sell its Danish subsidiary Shell Olie-og Gasudvinding Danmark (SOGU) for $1.9 billion to Noreco subsidiary Altinex.
SOGU has a 36.8percent non-operating interest in the Danish Underground Consortium (DUC) responsible for most of the major field developments in the Danish North Sea.
Subject to regulatory approval the deal should go through in 2019.
Andy Brown, Shell’s Upstream Director, said the transaction was “consistent with Shell’s strategy to simplify its portfolio through a $30-billion divestment program.”
Noreco will assume all Shell’s existing commitments, including the Tyra field redevelopment and associated decommissioning costs.
The sale represents net production (in 2017) of around 67,000 boe/d. Shell Trading and Supply and Shell Energy Europe will continue to have oil and gas lifting rights from the SOGU assets for a period after completion.
Local SOGU staff mainly dedicated to the DUC will transfer to Noreco.
Noreco expects as a result to become the second largest oil and gas producer in the country, with a share of 15 fields in four producing offshore hubs: Halfdan, Tyra, Gorm and Dan.
The DUC is a joint venture between Total (31.2%), Shell (36.8%), Chevron (12%) and Nordsøfonden (20%).
Total, which joined through its acquisition of Maersk Oil, also recently announced a deal to buy Chevron’s interest in the DUC, again subject to approvals.
Noreco will gain proven and probable (2P) reserves of 209 MMboe, of which 65percent are liquids, with production growth potential based on existing resources (discoveries, EOR initiatives and new projects).
The DUC’s opex in 2017 was $13/boe. As the Tyra hub is redeveloped, the portfolio will be strengthened providing improved economics and longer field life, Noreco added.