LONDON (AP) — Royal Dutch Shell has agreed to sell stakes in 10 North Sea oil fields to smaller rival Chrysaor for as much as $3.8 billion as it dumps assets to refocus its business in an era of lower oil prices.
Some 400 employees are expected to transfer to Chrysaor as part of the deal. The assets produced 115,000 barrels of oil equivalent a day last year, more than half the 211,000 barrels generated by Shell's North Sea operations.
The North Sea oil industry, one of the biggest and oldest in Europe, has been trying to cope with a toxic combination of aging, drying wells together with lower oil prices. The toxic combination has forced companies to rethink investments and putting thousands of jobs at risk.
Brent crude, the benchmark for international oil, hit 12-year lows below $30 a barrel early last year amid slowing economic growth in China and increased production in the U.S. That's down from more than $100 a barrel as recently as September 2014. Prices have recovered somewhat, with Brent, the international standard, back above $50 a barrel.
Shell is facing additional pressure following its $52.6 billion takeover of BG Group PLC last year. That deal increased Shell's proven reserves by 25 percent, but critics questioned its logic following the drop in oil prices.
"This deal shows the clear momentum behind Shell's global, value-driven $30 billion divestment program," said Simon Henry, Shell's chief financial officer, adding that the "value here represents a profit against the book values of the assets, and a breakeven oil price above that for the BG acquisition."