Blog Coverage Royal Dutch Shell Sells Its Gabon Assets to Assala Energy; Executes Next Step of its Divestment Strategy

LONDON, UK / ACCESSWIRE / March 27, 2017 / Active Wall St. blog coverage looks at the headline from Royal Dutch Shell PLC (NYSE: RDS-A) and Carlyle Group L.P. (NASDAQ: CG). Royal Dutch Shell, through its affiliates, announced on March 24, 2017, that it has reached an agreement with Assala Energy Ltd, a portfolio Company of Carlyle Group to sell 100% of its Gabon onshore interests for $587 million. The agreement is subject to certain conditions with closing expected in mid-2017. Register with us now for your free membership and blog access at:

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Breaking down the Agreement

This transaction includes all of Shell’s onshore oil and gas operations and related infrastructure in Gabon, which further includes, five operated fields, participation interest in four non-operated fields as well as the associated infrastructure of the onshore pipeline system from Rabi to Gamba and the Gamba Southern export terminal. Shell onshore in Gabon reportedly produced about 41,000 barrels of oil equivalent per day in 2016 while Shell Trading holds the lifting rights from the assets for the next 5 years.

Assala Energy will initially assume the debt of $285 million as part of the transaction. Additionally, the Company will make additional payments up to a maximum of $150 million as per pending performance and commodity prices. The transaction will result in impairment charges of $53 million post tax which will be taken in Q1 FY17.

Details of the transaction

Shell currently employs some 480 staff members, including about 50 expatriates. The Company holds 75% equity interest in Shell Gabon (SG), where the government holds the remaining 25%, and 100% interest in Shell Upstream Gabon. This transaction hands nine onshore oil fields and a network of oil pipelines to Carlyle-backed Assala Energy. Shell has been executing a divestment strategy since last year and has amassed almost $21 billion with a targeted $30 billion in net asset sales by 2018. The Company is focusing on its upstream business post its merger with BG Group last year, with a long-term strategy to boost cash flows and drive down debts.

Shell’s Divestment-Backed Growth Portfolio

Shell Global views this decision as a step under its strategy to concentrate on its upstream footprint where it expects to be more competitive. Post the recent divestments in the UK, Gulf of Mexico, and Canada, this agreement clears the air on Shell’s $30 billion divestment program and helps it execute a simplified upstream portfolio.

On March 09, 2017, Shell signed two agreements with a subsidiary of Canadian Natural Resources Limited, to sell all of its in-situ and undeveloped oil sands interests in Canada and reduce its share in the Athabasca Oil Sands Project (AOSP) from 60% to 10%. The initial consideration for the assets was $8. 5 billion, comprising of $5.4 billion in cash with 98 million Canadian Natural shares valued at $3.1 billion. Prior to this announcement, Shell agreed to sell a package of UK North Sea assets to Chrysaor for a total of up to $3.8 billion. The decommissioning costs associated were expected to be $3.9 billion, of which Shell would retain a fixed liability of $1 billion while Chrysaor would assume the remaining liability.

Stock Performance

At the close of trading session on Friday, March 24, 2017, Royal Dutch Shell’s share price finished last Friday’s trading session at $52.06, marginally down by 0.76%. A total volume of 2.83 million shares exchanged hands. The stock has advanced 11.33% and 16.05% in the last six months and past twelve months, respectively. Furthermore, the stock is trading at a PE ratio of 45.59 and has a dividend yield of 7.22%. At last Friday’s closing price, the stock’s net capitalization stands at $219.49 billion.

On Friday, March 24, 2017, the stock closed the trading session at $15.65, falling 1.57% from its previous closing price of $15.90. A total volume of 329.87 thousand shares have exchanged hands. Carlyle Group’s stock price advanced 1.31% in the last three months, 4.88% in the past six months, and 7.42% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have gained 3.64%. The stock currently has a market cap of $5.21 billion and has a dividend yield of 4.09%.

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