Shell Sells Irish Gas Field Stake for $1.2 Billion to Canada Pension Fund
July 12 2017 - 06:26AM
Dow Jones News
By Michael Amon
LONDON-- Royal Dutch Shell PLC has sold its stake in a
controversial Irish gas field for up to $1.23 billion to one of
Canada's biggest pension funds, but the deal will result in a $350
million impairment charge, the company said Wednesday.
Shell led the development of the Corrib gas field, located in
the Atlantic Ocean about 52 miles off the coast of rural County
Mayo. The field began pumping in 2015 after years of delays.
A subsidiary of the Canada Pension Plan Investment Board will
take control of Shell's 45% interest in Corrib. Vermillion Energy,
a Calgary-based oil-and-gas producer, will become the new operator
of the field. The transaction is for $947 million initially with
payments of up to $285 million between 2018 and 2025, depending on
gas prices and production.
Shell said the sale was consistent with its plan to sell off $30
billion in assets by 2018. In a news release, Andy Brown, a top
Shell executive, said the company has announced deals valued at
over $20 billion.
"This transaction is part of our strategy to reshape Shell and
to deliver a world class investment case," Mr. Brown said.
The company said the transaction will result in an impairment
charge of about $350 million, which will be reflected in its
second-quarter earnings. The company said a $400 million "negative
non-cash Cumulative Currency Translation Difference" will be
released when the deal is completed.
The company will maintain a presence in Ireland through an
aviation joint venture, Shell and Topaz Aviation Ireland Limited,
based near Dublin airport.
Shell acquired the company that discovered Corrib in 2002, but
the British-Dutch firm's plans to build an onshore pipeline to
transport the field's gas to a terminal it would construct at
Bellanaboy in County Mayo met with fierce local opposition. That
resistance focused on concerns about the safety of the pipeline and
its effects on the environment. It led to changes to the pipeline's
path, including routing it through a 4.9 kilometer (3 miles long)
tunnel, the longest in Ireland, that increased the project's costs
and forced delays.
Write to Michael Amon at michael.amon@wsj.com
(END) Dow Jones Newswires
July 12, 2017 06:11 ET (10:11 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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