Shell has signed an agreement to sell its entire stakes in 13 onshore concessions, in Egypt’s Western Desert, as well as a 50% stake in Badr El-Din Petroleum Co. (Bapetco), all in Egypt. The deal is expected to complete in the second half of the year. It will have an effective date of January 1, 2020.
The assets are being sold to Cheiron Petroleum Corporation and Cairn for a consideration of $646Million, with additional contingent payments of up to $280Million depending on oil price and exploration success.
The deal covers 40% interest in Alam El Shawish and 52% interest in North East Abu Gharadig. The 100% owned onshore exploration assets are South East Horus, West El Fayum, and South Abu Sennan a 100% stake in the Obaiyed, North Umbaraka, Badr el Din (BED) fields, Sitra, North Alam El Shawish, and North Matruh.
Cheiron purchases half of these Shell’s stakes in the 13 concessions. The remaining half will be purchased by Cheiron’s strategic partner, Cairn Energy plc, a new entrant into the Egyptian upstream sector.
Cheiron will operate the production and development concessions in the asset portfolio, whereas Cairnwill operate three of the exploration licenses. The field activities will continue to be managed by the Bapetco Joint Operating Company.
The consideration will be subject to customary working capital adjustments for the period between the effective date of the transaction (1 January 2020) and the completion date.
The acquisition will add Proven plus Probable reserves of 226MMBOE and production of approximately 80KBOEPD (as at 31 December 2020).
Funding for the acquisition will be provided by a strong syndicate of nine International European, Middle Eastern and African Banks and Lenders, and advisory support has been provided to the partnership by Rothschild & Co and Gaffney Cline & Associates. It’s a reserve-based lending (RBL) facility of up to $350mn and a joint junior debt facility of $100mn. Existing cash on balance sheet will also be contributed.
The asset sale is subject to Government and Partner approvals and is expected to complete in the second half of 2021.