Shell Exploration & Production Company has sold 26 mature shallow water properties in the Gulf of Mexico. The sale has taken place through two transactions: the sale of a volumetric production payment* to Morgan Stanley for $300 million and the sale of the properties to Apache Corporation, subject to preferential right elections. The total price received for the properties is $500 million, equivalent to some $12/ boe on a proved reserves basis. The sale, effective July 1, 2003, was concluded in a fast and efficient process, and builds on the earlier success of cooperation between Shell and Apache.
Included in the divestment are 15 operated and 11 non-operated properties covering 50 Outer Continental Shelf lease blocks as well as an interest in two onshore gas condensate separation plants that serve the offshore fields. The properties include 107 active wells and 17 major production platforms and existing production handling agreements. Current net production is 29 kboe/day, of which 76% is gas.
The sale is part of the Shell Group's on-going portfolio upgrade, averaging some $2 billion per year of divestments. Portfolio management is a key source of value creation for Shell's business, enabling focusing of resources in areas of highest returns.
*A volumetric production payment (VPP) provides the buyer thereof ownership of a certain volume of oil and gas to be produced from the properties to be delivered to the buyer of the VPP over a number of years.