Shell's $1-billion New Zealand sale said to draw OMV, Vermilion

By Brett Foley, Perry Williams and Scott Deveau on 6/23/2017

MELBOURNE and TORONTO (Bloomberg) -- Royal Dutch Shell Plc’s sale of its remaining New Zealand energy assets has drawn interest from companies including OMV AG and Vermilion Energy Inc., people with knowledge of the matter said.

Vermilion has been talking with potential financial partners about bidding together for Shell’s stakes in two New Zealand gas fields, one of the people said. Smaller local energy companies including Greymouth Petroleum Ltd. have also been considering teaming up with other investors for joint offers, the people said, asking not to be identified as details are private. The assets could fetch as much as $1 billion, the people said.

Shell and its adviser, JPMorgan Chase & Co., have asked for indicative bids by next month, said the people. The company expects choose a winner before the year-end, according to the people.

CEO Ben van Beurden has made debt reduction a top priority at Shell since the purchase of BG Group Plc last year. Its $30 billion divestment program is on track and a further $5 billion of asset sales are at an “advanced” stage, the company said in February. Earlier that month it announced the sale of fields in the North Sea and Thailand for as much as $4.7 billion.

Deliberations are at an early stage, and there’s no certainty the suitors will submit indicative offers, the people said. Representatives for Greymouth and OMV declined to comment, while a representative for Vermilion didn’t immediately respond to requests for comment. Shell said in an emailed statement it has started engaging with potential interested parties on the company’s assets in New Zealand with the help of JPMorgan. 

“The process is consistent with the announcement of the strategic review and Shell Group’s approach to reshaping its global portfolio in line with its long-term strategy,” it said in the statement. “Any discussions with potentially interested parties are confidential.”

Shell said in April it will sell its half stake in the Kapuni gas field to joint venture partner Todd Energy Ltd. for an undisclosed amount. It also agreed to buy Todd out of the operating company that controls two other gas fields. Shell said it would explore divestment options for those remaining assets, an 84% stake in the Maui field and 48% of the Pohokura field, according to its  website. 

OMV, the Vienna-based oil producer, owns minority stakes in both fields.

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