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Shell’s U.S. oilfield sale may bode well for disposal program

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…analysts also say further deals may prove harder to clinch

Aug 30 2016, 11:47 ET | By: Carl Surran, SA News Editor

Analysts say Royal Dutch Shell’s (RDS.A, RDS.B) first oilfield sale after its BG Group acquisition bodes well for its sale talks in the North Sea, Gabon and New Zealand, signaling that buyers will meet the company’s expectations on value.

The $425M sale of the Brutus/Glider fields has an implied oil price of ~$60/bbl, more than $10/bbl above current prices, according to UBS analysts who say “we may now be entering a period where both buyer and seller can see acceptable relative value, unlocking the A&D [acquisition and divestiture] market.”

But analysts also say further deals may prove harder to clinch, as activity in the U.S. market picked up faster than other areas; among various places, Shell is trying to sell a large portfolio of fields in the U.K. North Sea, an aging basin with high production costs and strict regulatory requirements.

Shell has sold $2B of assets YTD, leaving little time to hit its $6B-$8B target.

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