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Reuters: Shell looks to cut stake in Newfoundland oil play

Wed Mar 5, 2008 10:54am EST

CALGARY, Alberta (Reuters) – Royal Dutch Shell Plc’s (RDSa.L: Quote, Profile, Research) Canadian unit is hunting for a partner willing to take a stake in an expensive exploration play off the coast of Newfoundland.

Shell Canada Energy is looking for a company willing to farm into its 20 percent stake in the Orphan Basin exploration play. Any successful bidder would pay drilling costs in return for an interest in the properties.

“We are simply looking to see if there are parties interested in sharing the cost and risks of our interest in the next Orphan well,” Jeff Mann, a spokesman for Shell, said on Wednesday.

Shell Canada, the Canadian arm of the European oil and gas major, holds the stake in a 21,250 square kilometer (8,205 square mile) block in the basin, 350 kilometers off the East coast of the Canadian province. Chevron Corp (CVX.N: Quote, Profile, Research) holds 50 percent, while Exxon Mobil Corp (XOM.N: Quote, Profile, Research) and Imperial Oil Ltd (IMO.TO: Quote, Profile, Research) each have 15 percent.

The partners have already drilled one well at the play at a cost that some reports have pegged at more than C$200 million ($202 million), while a second is expected to be drilled this year. Water depths in the region range from 1,500 meters to 3,000 meters (0.93 to 1.9 miles).

The Newfoundland government expects that the basin could yield fields containing more than 1 billion barrels of oil.

($1=$0.99 Canadian)

(Reporting by Scott Haggett; Editing by Peter Galloway)

http://www.reuters.com/article/OILINT/idUSN0560295720080305

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