U.S. oil major Chevron on Wednesday revealed its plans to sell its UK Central North Sea fields.
In an email sent to Offshore Energy Today, a Chevron spokesperson said Chevron Upstream Europe was undertaking a review of its portfolio: “Chevron regularly reviews its global portfolio to assess whether assets are strategic and competitive for future capital. A decision has been taken to initiate the process of marketing all our UK Central North Sea assets”
These include Alba, Alder, Britannia (and satellites), Captain, Elgin/Franklin, Erskine, and Jade fields.
“Throughout this process, we will continue to execute our business plan and operate safely,” the spokesperson said.
“Chevron selling its assets in the UK Central North Sea would continue the trend of Majors divesting non-core UK assets. These projects are having to compete for capital on a global scale and simply won’t make sense for such big companies, but could be core for a more UK-focused player,” said Kevin Swann, research analyst, North Sea upstream, at global natural resources consultancy Wood Mackenzie.
Swann said: “It’s interesting to note that it looks like Chevron is planning to keep its interest in large West of Shetland assets, Clair and Rosebank, as that too is following a trend for the Majors in becoming more focused on West of Shetland.”
He added: “West of Shetland is attractive because it’s relatively under-explored compared to the rest of the UK, with only 160 wells drilled on it so far versus 500+ in other areas. It also has materiality and longevity, with several very large assets already producing, and new infrastructure in place to service any further discoveries.
“It’s a chunky portfolio too, with total reserves on offer of around 180 million barrels of oil equivalent and we expect production from the assets to average around 65,000 barrels of oil equivalent per day this year.
“Potential buyers would depend on the price but if one company is looking to buy the whole package, it would need to be one with deep pockets. The bigger private equity players could be interested, as could some North Sea independents and international players. However, dividing the assets up into smaller packages would widen the net of potential buyers.”
Deirdre Michie, Oil & Gas UK’s chief executive, said:“While we cannot comment on the commercial decisions of our members, we commend the contribution Chevron has made and continues to make to the success story of the UK North Sea. The sale, and indeed purchase of assets, is a natural part of the commercial life of the UKCS as companies optimize their portfolios. Sale of these assets will present new opportunities for other companies who will seek to maximize recovery from mature assets on the UK Continental Shelf.”