Last month, Reuters published an exclusive in which it reported that Shell intends to sell some key UK Southern North Sea gas assets.
The assets are the Clipper hub as well as the Leman Alpha complex, which Shell hopes to be valued at $1 billion in total. Combined, these fields still produce around 7 MMboe per year in gas.
For some more information about the fields, see this video produced by Mike Cooper at Trove News.
With recent gas prices at record highs, one would think Shell could equally hold on to them a little longer. However, according to Reuters, it comes at a moment when the multinational aims at selling an average of $4 billion worth of assets a year, arguing that “some late-life assets that are probably better off in the hands of others.”
Who could potentially buy these assets? Given the estimated value it is likely that a private equity-backed vehicle is the only logical candidate. This observation may then be linked to some changes at board levels in the UK seen recently.
As many people will now know, Phil Kirk unexpectedly stepped down as the CEO at Harbour. Kirk is not totally unfamiliar with the Southern Gas Basin: he co-founded and ran CH4 – an early private-equity backed player in the very Southern Gas Basin – from 2004 to 2006 until they sold to Venture Production.
Then, during his time at Chrysaor, Kirk acquired a significant UK North Sea asset package from Shell for a price of $3.8 billion. The sale, which was completed in November 2017, consisted mainly of Central North Sea assets, plus a 10% stake in Schiehallion.
At the same time as Kirk leaving Harbour, Chris Cox announced that he will step down from his role at Spirit. Given that Spirit is essentially running down its UK portfolio, it is no real surprise that he considered his job “done.”
Even though this is all speculative, the fact that these things all happened in a short period of time, one could draw up a hypothesis that Phil Kirk is ready for another cycle of company build up. As Kirk said in the Harbour press release: “I depart to consider other business opportunities.” He has certainly got the gravitas.
Knowing that Spirit also has a strong foothold in the Southern North Sea, which will have exposed Chris Cox to a relevant part of the UK sector in this regard, is it unthinkable that (they) could end up working together?
HENK KOMBRINK
