The Nigerian subsidiary of the integrated energy major Royal Dutch Shell plc RDS.A has concluded the divestment of its stake in oil mining lease (OML) 29 and the Nembe Creek Trunk Line (OML29 and NCTL), and associated infrastructures in the Eastern Niger Delta.    

The subsidiary – Shell Petroleum Development Company of Nigeria Limited (“SPDC”) – sold its interest to Aiteo Eastern E&P Company Limited for a cash consideration of $1.7 billion.
The company announced that the sale is in accordance with the planned review of the onshore portfolio of SPDC.

The 983 square kilometer (Km) area under sale – OML29 – comprises the Nembe, Santa Barbara and Okoroba fields and associated infrastructure. In 2014, the fields produced roughly 43,000 barrels of oil equivalent per day. The Nembe Creek Trunk Line, the other asset sold, spreads over roughly 100 Km and transports crude at a rate of 600 thousand barrels per day.  

SPDC, with its 30% stake, was the operator of the joint venture project – including OML29 and NCTL. Other parties included Nigerian National Petroleum Corporation, Total’s TOT affiliate and Nigerian Agip Oil Company Limited, with 55%, 10% and 5% stake, respectively.

Nigerian Agip Oil Company Limited and the affiliate of Total have also sold their respective interests in the project to Aiteo, which has increased its stake in the development to 45%.   

Shell owns one of the largest oil and gas businesses in the world. It is involved in various activities related to oil and natural gas, chemicals, power generation, renewable energy resources and other energy related businesses.

Since the last few years, Shell’s energy establishments in Nigeria have come under a string of attacks from the country’s main militant group. This has forced the company to scale down its local operations by selling assets regularly. Shell, which has been operating in Nigeria since 1937, needs to substitute the lost reserves and production with new ones. Moreover, with crude prices tumbling, the company’s upstream division has been able to extract less value for its products. This has put pressure on the group’s profit margins.

Currently, Shell carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy sector are Western Refining Inc. WNR and Ferrellgas Partners LP FGP. Both stocks sport a Zacks Rank #1 (Strong Buy).