Repsol has sold its LNG assets to Shell for US$ 6.7 billion. The deal includes the minority stakes in Atlantic LNG (Trinidad & Tobago,) Peru LNG and Bahia de Bizkaia Electricidad (BBE), as well as the LNG sale contracts and time charters with their associated loans and debt.
Excluding the financial leases and financial gross debt, the equity value of the assets included in the sale is $4.4 billion, generating a pre-tax capital gain of $3.5 billion for Repsol.
The deal strengthens Repsol’s financial position and reduces its net debt to €2.2 billion euros, excluding Gas Natural Fenosa.
Repsol and Shell have additionally signed an LNG supply agreement by the latter to the Canaport regasification terminal of approximately 1 million t over a 10-year period. The North American facility is not included in the sale process as the low gas prices currently seen in the US market do not allow the asset’s medium and long-term potential to be adequately valued. Repsol will analyse all available operational, financial and strategic options for this asset.
The funds obtained from the sale of the LNG assets will allow Repsol to boost its upstream organic growth strategy following the completion of the transformation of the downstream unit with the expansion of the Cartagena and Bilbao refineries.
The exploration and production unit is the company’s main growth engine, centred on ten key growth projects which include some of Repsol’s most significant exploratory successes of recent years. Repsol will maintain significant exploration and production activity in the countries where it has sold LNG assets.
Repsol has recently made an important discovery in Peru, located in block 57, called Sagari, with preliminary resource estimates of up to 2 trillion cubic feet of gas.
In Trinidad and Tobago, Repsol maintains significant production and is drilling new wells. The company has stakes in seven blocks and is exploring options to obtain new licenses.
Repsol and Shell intend to complete the agreement before the end of 2013 after obtaining the necessary approvals and fulfilling the agreed conditions. Until the close, Repsol will continue to operate the assets.
Adapted from press release by Callum O’Reilly
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