Shell sells stake in Gulf project for nearly $1B
Royal Dutch Shell said Thursday it will sell its stake in a deepwater Gulf of Mexico development for nearly $1 billion, continuing the recent uptick in activity in the Gulf.
The transaction will hand over Shell’s 22.45 percent stake in the Caesar-Tonga project for $965 million in cash to Israel’s Delek Group. The development, which began production in 2012, is operated by The Woodlands exploration and production company Anadarko Petroleum. Shell is the third-largest stakeholder after Anadarko and Norway’s Equinor.
The sale is part of Shell’s effort to divest $10 billion in non-core assets through 2020 to fund growth and share buybacks. Shell just completed a $30 billion divestment program last year after buying the British natural gas company BG Group in one of the biggest energy deals in recent years. The sale to Delek is expected to close by the end of the third quarter.
“The sale will contribute to Shell’s ongoing divest
ment program and allow us to direct resources to the areas where we see the most value in the longer term,” said Andy Brown, Shell’s upstream director.
Shell will remain a top player in the Gulf of Mexico.
After all, Shell completed a series of smaller expansions last year and, this fall, will put its multibillion-dollar Appomattox platform in operation about 80 miles off the Louisiana coastline. Appomattox will be followed in 2021 with the Vito platform about 150 miles southeast of New Orleans. After Vito, Shell expects to hone in on its Whale discovery — announced a year ago — in the southwest Gulf almost 200 miles south of Houston.
Delek, Israel’s top energy company, has eyed more growth in the North American market in recent years. This deal gives Delek a key crude oil position in the deepwater Gulf without having to take the lead operator position.
The Caesar-Tonga field is located about 190 miles south of New Orleans at water depths of about 4,900 feet.
The field connects via underwater pipelines to Anadarko’s nearby Constitution platform, which launched in 2006. The Caesar-Tonga development was an earlier version of the now-popular, cost-saving trend in the Gulf — expanding near existing production with subsea tiebacks in order to avoid having to build new multibillion-dollar platforms.