Shell Optimistic About Their Slimmer North Sea Operation

Various bits and pieces of the media have reported on the 140% increase in profit claimed by Shell this week. Shell’s financial chief, Jessica Uhl,  said the North Sea remains important even though streamlining in future will leave the company with less of a presence in the area.

Since writing this , as of today, it looks like the deal has gone through. Click here.

This follows the January sale of half  its UK production assets to to Chrysaor for upwards of $3 billion. According to the Chrysaor website the deal has not quite been finalised but looks on course to make this independent player one of the biggest in the UK.

picture of a platform and a link to Chrysaor.
Chrysaor talk positive about their role. Click above to link to their website.

Of course that is not necessarily great news for the return of the jobs lost. When the deal was announce Phil Kirk, Chrysaor chief executive said:

‘Chrysaor is acquiring a high quality package of assets which combine low cost production, a substantial reserves and resources base with strong cash flows and a highly competent and skilled workforce. These assets, combined with our own experience and the outstanding team who will transfer from Shell, provide an excellent platform for change and growth in the North Sea.’

After dealing with any health and safety issues, words like strong cash flows are what I want to hear, however, we will have to see where that cash flow goes if indeed it ever comes back with any strength at all. Much has been made of the rally in oil prices over the last year but globally oil stocks are still high and continue to threaten uncertainty in the barrel price.

In comparison the development of gas production off Shetland is more encouraging and of course Shell has a big hand there. Broadening the picture slightly is the interest the company has in deep water projects off the Brazilian coast.

1700 people in the North East Scotland and will be subject of this Shell/ Chrysaor deal. Maybe the first indicator of real confidence will be if all of them retain their jobs when the transaction is completed in the second half of this year.

Regards,

Chris Hodge

For one of the source articles, Click here

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