Shell sells Danish upstream assets to Norwegian Energy in $1.9 billion deal
By Nerijus Adomaitis OSLO (Reuters) - Royal Dutch Shell has agreed to sell its Danish upstream business to Norwegian Energy (Noreco) in a deal valuing the assets at $1.9 billion, as part of its wider divestment strategy, the company said on Wednesday. The sale brings Shell's three-year $30 billon divestment plan close to its conclusion, having begun the process in 2015 after the acquisition of BG Group
By Nerijus Adomaitis
OSLO (Reuters) - Royal Dutch Shell has agreed to sell its Danish upstream business to Norwegian Energy (Noreco) in a deal valuing the assets at $1.9 billion, as part of its wider divestment strategy, the company said on Wednesday.
The sale brings Shell's three-year $30 billon divestment plan close to its conclusion, having begun the process in 2015 after the acquisition of BG Group. Deals so far have included large portfolios in the British North Sea, Gabon, Thailand and Canada.
"Today's announcement is consistent with Shell's strategy to simplify its portfolio through a $30 billion divestment programme and contributes to our goal of reshaping the company into a world-class investment case," Shell's upstream director, Andy Brown, said in a statement.
The payment from Noreco to Shell will be adjusted for the cash flow Shell has generated since the deal's effective date, which will be set to Jan. 1, 2017.
"We expect to pay around $1.2 billion," Noreco's Chairman Riulf Rustad confirmed to Reuters. He said Noreco and Shell started discussions about the deal around January 2017.
Reuters reported in February 2017 that Shell was seeking to sell its upstream assets in Denmark.
However, Shell will transfer $1.1 billion of decommissioning liabilities associated with the assets to the buyer, analyst Biraj Borkhataria at RBC Capital Markets noted.
For Noreco, the transaction will add output of 67,000 barrels of oil equivalents per day (boed), making it the second-largest oil and gas producer in Denmark behind French oil major Total, the Norwegian company said.
Noreco said the deal comprised proven and probable (2P) reserves of 209 million barrels of oil equivalents (mmboe) at the end of last year, 65 percent of which were liquids.
Shares in Oslo-listed Noreco surged 90 percent to 288.50 Norwegian crowns ($35.30) on the announcement and closed 54 percent up on the day at 231.50 crowns. Shell's shares eased by 0.4 percent.
The deal gives Noreco a 36.8 percent stake in the Danish Underground Consortium (DUC), which has assets in 15 offshore fields.
Total, which holds 31.2 percent in DUC, agreed on Sept. 25 to buy an additional 12 percent stake from Chevron, while state-owned Danish company Nordsofonden has the remaining 20 percent.
As part of the deal, Noreco will assume all of Shell's existing commitments and obligations, including the Tyra field redevelopment.
"Noreco expects to maintain strong production in the years to come ... As the Tyra hub is being redeveloped, the portfolio will be revitalised and offer improved economics accompanied by prolonged field life," Noreco added.
DUC partners decided in December to redevelop the Tyra gas field at a cost of 21 billion Danish crowns ($3.25 billion), prolonging its life and enabling production of more than 200 mmboe.
Noreco said funding for the Shell deal would be provided by a private placement of new shares and a convertible bond, as well as a $900 million loan from BMO Capital Markets, Deutsche Bank and Natixis.
Noreco's largest shareholders -- CQS, Kite Lake Capital Management, Taconic Capital Advisors and funds managed by York Capital Management -- will subscribe to the $160 million convertible bond and 15.6 million new shares at $22.62 per share, it added.
(Additional reporting by Ron Bousso in LONDON; Editing by Louise Heavens, David Goodman and Kirsten Donovan)
This story has not been edited by Firstpost staff and is generated by auto-feed.
By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States
BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.