Royal Dutch Shell has agreed to sell its onshore production assets in Gabon to a company backed by Carlyle Group for up to $1bn, in the latest sign of private equity investors buying mature oil and gas fields from large energy groups.
Assala Energy, set up by Carlyle to invest in sub-Saharan Africa, will pay Shell $587m in cash and assume $285m of debt. Further payments up to a maximum of $150m will be subject to commodity prices and production performance.
The deal adds to a succession of disposals this year which have taken Shell two-thirds of the way towards its target to sell $30bn of assets by the end of 2018 as part of efforts to reduce debts after its £35bn ($43.7bn) takeover of BG Group.
For Carlyle, the acquisition marks one of its biggest forays so far into oil and gas and highlights the appetite of private equity investors for cash-generative production assets put up for sale by large energy groups since oil prices crashed in 2014.
This transaction involves about 41,000 barrels per day of oil production from five Shell-operated fields — Rabi, Toucan/Robin, Gamba/Ivinga, Koula/Damier, and Bende/M’Bassou/Totou — and interests in four non-operated fields, as well as associated pipeline infrastructure.
Andy Brown, head of Shell’s upstream business said:
Shell is very proud of the strong legacy we have built in Gabon over the past 55 years. The decision to divest was not taken lightly, but it is consistent with Shell’s strategy to concentrate our upstream footprint where we can be most competitive.
Together with recent divestments in the UK, Gulf of Mexico and Canada, this transaction shows the clear momentum behind Shell’s $30bn divestment programme, and it helps us to [upgrade] and simplify our upstream portfolio following the acquisition of BG.
Carlyle has been negotiating with Shell over the Gabon assets for several months after fending off competition from Perenco, an independent European oil and gas company.
Finance for the acquisition will come from Carlyle International Energy Partners, a $2.5bn fund launched in 2013 targeting oil and gas investments outside North America, and the $698m Carlyle Sub-Saharan Africa Fund.
Mercel van Poecke, head of Carlyle International Energy Partners, said the deal would provide a foundation for further potential investment in Gabon’s energy sector, where he said Assala’s management team had extensive experience.
The transaction is expected to close over the summer, after which all of Shell’s local employees will transfer to Assala.