Chevron has begun a process to sell several of its oil and gas fields in the UK Central North Sea as part of a re-evaluation of its European activities.
Reuters reported that the assets under consideration include the Alba, Alder, Captain, Elgin/Franklin, Erskine, and Jade fields, along with the Britannia platform and its satellites.
Chevron is the latest US-based company to back out of the North Sea. A day before its announcement, ConocoPhillips agreed to a swap deal with BP, giving the British operator a 16.5% stake in the Clair Field in exchange for BP’s 39.2% stake in the Greater Kuparuk oil field in Alaska, as well as a 38% interest in the Kuparuk Transportation Co.
Kevin Swann, a research analyst of North Sea upstream at Wood Mackenzie, said Chevron’s move is continuing a trend of major operators divesting their 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,” he said.
Though it is selling some of its assets in the region, Chevron is still considering what to do with the Rosebank field west of Shetland. Reuters said that the company, along with co-owners Suncor, Siccar Point, and Ineos, are trying to reduce the costs of the project. Swann said west of Shetland is an attractive area because it is relatively unexplored compared to the rest of the UK, with 160 wells drilled vs. 500 or more in other areas. The area has several large assets already producing and new infrastructure in place to service further discoveries.
Swann also said several companies will be interested in buying Chevron’s assets, but the list of potential buyers will depend on the price and the manner in which the company will divide its portfolio.
“If one company is looking to buy the whole package, it would need to be one with deep pockets,” Swann said. “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.”
Chevron produced 50,000 BOPD and 155 MMcf/D of natural gas in the North Sea last year.