Rosebank Stake Buyer Needs Deep Pockets

Rosebank Stake Buyer Needs Deep Pockets
Any buyer for Chevron's stake in the Rosebank field will need to have very deep pockets to fund the capital cost of development, says Wood Mackenzie.

Any buyer for Chevron’s stake in the Rosebank field, located West of Shetland offshore UK, will need to have very deep pockets to fund the capital cost of development.

That’s according to Ross Cassidy, part of Wood Mackenzie’s Europe upstream research team, who said the company estimates this cost at more than $6 billion in total.

“This could mean another large player looking to increase their exposure in West of Shetland or one of the largest private equity companies that have come on the scene recently,” Cassidy said in a statement sent to Rigzone.

The Wood Mackenzie representative said Chevron has been weighing up development options “for a number of years” but has yet to take a final investment decision (FID). 

“The asset may be struggling to compete for capital within Chevron’s low breakeven tight oil portfolio, focused on the US Permian basin,” Cassidy stated.

“But a sale would reduce Chevron’s pool of conventional growth opportunities, increasing its dependence on delivering in the Permian,” he added.

Cassidy said any future development will likely involve a new-build, harsh environment floating production, storage and offloading vessel and up to 20 production wells.

“If a final investment decision is taken in 2019, first oil could be in 2024, rising to around 100,000 barrels of oil equivalent per day at peak production,” Cassidy said.

Rosebank, which was discovered in 2004, is the largest undeveloped field in the UK upstream sector, according to Wood Mackenzie.

On September 26, a Chevron spokesperson told Rigzone that the company had received an expression of interest for its share in the Rosebank project.

Chevron operates and holds a 40 percent interest in the project, which is expected to make an approximately $11.8 billion (GBP 9 billion) contribution to the UK economy in taxes and expenditures through its life span, according to Chevron’s website.

“The Rosebank project has the potential to unlock a region that holds a significant portion of the United Kingdom's undeveloped oil and gas resources,” Chevron states on its website.

Earlier this year, a Chevron spokesperson told Rigzone that the company had taken a decision to initiate the process of marketing all its UK central North Sea assets.


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JRD  |  September 27, 2018
How will the Chevron move to market their share of Rosebank affect the upcoming awarding of the FID?