Shell puts Thai assets up for sale
Tuesday 23 June 1998
The shake-up in the energy sector underlines the pressure to focus activities at a time when crude oil prices have hit their lowest levels in real terms for 25 years.
Shell, which last week revealed plans for a joint venture with Premier Oil in Pakistan, will tender its upstream Thai business worth an estimated $300m (pounds 180m) on 29 June. "We want to concentrate on our core interests and Thailand is not considered part of that," said a spokesman at Shell's London head office.
Around nine bidders, including Malaysian state oil company Petronas, are in the frame to take a stake in the S1 onshore block which Shell operates, plus the B6/27 concession and other assets.
Any deal would not impact on Shell's downstream activities in Thailand, which include a 64 per cent interest in the Rayong refinery and the Shell Thailand chemicals marketing business.
Meanwhile, Enterprise yesterday announced the pounds 165m sale of holdings in the UK fields of Piper, Claymore, Saltire and Scapa to newly-created company Intrepid. Enterprise has also sold a 5.7 per cent stake in the Nelson field to Intrepid, which is run by the former UK chief of Santa Fe, Mike Lynch.
The sale of non-core assets will result in a post-tax profit on disposal of pounds 35m in 1998 and remove 25,700 barrels of oil equivalents from the Enterprise portfolio. Chief executive Pierre Jungels insisted the sale was "purely opportunistic" rather than a reaction to the oil price.
But he admitted the cash would help fund this year's record expenditure of pounds 500m on development and a further pounds 170m on exploration. "The funds realised will be re-deployed over time in other parts of our business where we believe we can achieve higher returns for shareholders," he said.
Analysts said both the strategy and the price seemed good for Enterprise. The assets were exposed to mooted changes in the North Sea fiscal structure. Alan Marshall, oil analyst at Robert Fleming, said: "The strong price indicates that oil companies remain confident that the current crude price is a downward blip rather than a structural change."
Enterprise also said yesterday that its latest well in on the Llano prospect in the Gulf of Mexico was "extremely encouraging". The discovery, in which Enterprise holds a 30 per cent stake, means a development project will probably be fast-tracked.
With the price of July Brent crude falling to $12.13, oil companies are looking to Opec ministers meeting in Vienna this week to agree production cuts. Mr Jungels said he was confident Opec would act and the price would recover. Middle East producers are heavily reliant on their crude exports.
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