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OKEA buys Shell's Norway assets for US$556 mln

Jun 21, 2018
2 min read
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Norway's OKEA has agreed to buy Shell's entire 44.56 per cent interest in Draugen and 12 per cent interest in Gjøa in Norway for US$556 million.

The Draugen field was the first Norwegian Sea development and has been a flagship asset for A/S Norske Shell over the last 25 years.  The Gjøa field is a highly productive field with stable production, substantial subsurface upside and several tie-ins both committed and expected that will extend field life and value.

The deal is subject to government approvals, with completion expected by the end of the year and the effective date for the transaction January 1st 2018.

On completion, Draugen staff onshore and offshore are expected to transfer to OKEA with full continuity of service.

The private equity-backed company said that it aims to extend Draugen field life into the 2040s through continued focus on cost efficient operations, additional resources within the licence and near field exploration.

OKEA’s CEO Erik Haugane, said: “This high-quality acquisition is transformational for OKEA.  The Draugen field is known for its excellent reservoir properties, operational excellence and outstanding HSSE performance.  It will not only give us substantial production and cash flow, but additional operational capability and resource with which to take advantage of future opportunities and create value.  We look forward to welcoming the highly skilled and experienced team from Shell and continuing operations in a safe, effective and prudent manner, as we establish the most effective operating company on the NCS.”

“We are pleased to have found a buyer with an experienced leadership team and with a business strategy that aligns very well with the opportunities offered by Draugen and Gjøa” said Rich Denny, Managing Director of A/S Norske Shell.

The decommissioning costs associated with the assets are currently estimated to be $120 million after-tax and Shell said it will retain 8 per cent of this liability up to an agreed cap and OKEA will assume the remaining liability.

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