Shell To Divest Nigeria Onshore Oil Business For $1.3B

Tuesday, Oil giant Shell PLC SHEL said it has agreed to sell its Nigerian onshore subsidiary, The Shell Petroleum Development Company of Nigeria Limited (SPDC) to Renaissance, a consortium of five companies.

Renaissance comprises four exploration and production companies based in Nigeria and an international energy group.

The consideration payable to Shell as part of the transaction is $1.3 billion. 

The buyer will make additional cash payments to Shell of up to $1.1 billion, primarily relating to prior receivables and cash balances in the business, with the majority expected to be paid at the completion of the transaction.

The transaction has been designed to preserve the full range of SPDC's operating capabilities following the divestiture, including the technical expertise, management systems, and processes that SPDC implements on behalf of all the companies in the SPDC Joint Venture.

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After the completion of the transaction, Shell will retain a role in supporting the management of SPDC JV facilities that supply a major portion of the feed gas to Nigeria LNG (NLNG), to help Nigeria achieve maximum value from NLNG. 

"This agreement marks an important milestone for Shell in Nigeria, aligning with our previously announced intent to exit onshore oil production in the Niger Delta, simplifying our portfolio and focusing future disciplined investment in Nigeria on our Deepwater and Integrated Gas positions" said Shell's Integrated Gas and Upstream Director Zoë Yujnovich.

The SPDC JV holds 15 oil mining leases for petroleum operations onshore and 3 for petroleum operations in shallow water in Nigeria. It is operated by SPDC.

Price Action: SHEL shares are trading lower by 1.13% at $63.08 in premarket on the last check Tuesday.