Asset A&D

Shell Exercises ROFR to Acquire BP's Shearwater Stake

By Sakshi Jain
June 25, 2021
2 minutes read
Offshore Rig

Royal Dutch Shell Plc has exercised its right of first refusal to acquire BP Plc’s 27.5% non-operated working interest in the Shearwater field located in the UK Central North Sea, as well as a 12.176% stake in the Shearwater Elgin Area Line (Seal) and Seal Interconnector Link pipelines. Upon completion, Shell will hold a 55.5% operated interest in the field, with Exxon Mobil Corp. holding the remaining 44.5%.

In May this year, BP had entered into an agreement with London-based Tailwind Energy Ltd. to sell the Shearwater interest for an undisclosed consideration. Prior to this, in January 2020, BP had also signed an agreement with Premier Oil Plc (now Harbour Energy Plc) to divest its interest in its Andrew area and Shearwater assets in the UK Central North Sea, for a total cash consideration of US$625 million. That transaction was aborted in October last year when Premier entered into an agreement to merge with Chrysaor Holdings Ltd., and thereafter decided not to proceed with the acquisition of assets from BP.

The Shearwater field lies within license P188 (Block 22/30b) in the Central Graben area of the UK Continental Shelf (UKCS), approximately 225 km east of Aberdeen. Situated in water depth of approximately 90 meters, the field was discovered in 1998 and commissioned in 2000. Shearwater is a deep gas-condensate accumulation in the HPHT region of the UKCS, and is one of the biggest producing blocks in the North Sea.

The gas export capacity of the Shearwater platform is expected to be approximately 320 million cubic feet per day (MMcf/d), with an oil export capacity of up to 99 thousand barrels per day (Mbbls/d), from two pumps. Gas produced from the field is transported through the 463 km long Seal pipeline to the Bacton Gas Terminal, whereas oil is sent through the Gael pipeline into the Forties Pipeline System (FPS) and eventually onto Cruden Bay and Grangemouth. Current average daily production attributable to the acquired interest is approximately 4.95 thousand barrels of oil equivalent per day (Mboe/d).

The transaction is subject to customary closing conditions, including regulatory approvals.

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