Shell to divest Evans Shoal stake

Shell steps up overhaul
ROYAL Dutch Shell is poised to shed its $200 million-$300m stake in Evans Shoal, the offshore gas field in the Timor Sea, as the global energy giant reaches the final phase of a long-running overhaul of its Australian portfolio.
According to sources, Shell has drafted in Credit Suisse to advise on the sale of its 32 per cent holding. However, the decision to exit comes at an inauspicious time for the oil and gas sector as crude prices plunge to five-year lows, casting a pall over a number of asset sales, including Apache’s $2.5 billion domestic portfolio and the $2bn Montara oilfield in the Timor Sea, which is run by Thai oil and gas giant PTTEP. As The Australian reported recently, the Montara sale has been shelved while uncertainty still clouds the Apache process. The US company, which owns a minority 13 per cent stake in the Chevron-led Wheastone project, along with a large domestic portfolio of oil and gas assets, has drawn a wide field of suitors for its Australian portfolio, but sources said bids so far have failed to meet Apache’s expectations.
Despite the turbulent conditions, the Italian oil and gas company ENI is expected to show strong interest and is tipped as the most logical contender.
Last month Santos sold its 40 per cent portion of Evans Shoal to ENI for up to $US350m ($420m).
At the time, the Adelaide-based company, which has come under severe pressure from sliding oil prices, said it would receive $US250m upfront, followed by another cash payment of up to $US100m when a decision was made to develop the field. The deal’s precise amount hinges on how much gas is discovered.
Evans Shoal is thought to contain 6.6 trillion cubic feet of gas but has high amounts of carbon dioxide, rendering the project economics more challenging.
ENI sought approval from FIRB for the Santos sale and also needed a nod from the remaining partners — Shell, Malaysia’s Petronas and Japan’s Osaka Gas — which hold pre-emptive rights over each others stakes.
This may be the one of the last of Shell’s Australian assets to be put on the block. It is in the midst of weeding out $15bn of assets around the world. But the jettisoning of its investments here is set to slow with one source describing the company as in “harvest mode” on its sizeable Australian portfolio. The exception of course is its 13.6 per cent slice of Woodside.

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