The Nigerian subsidiary of the integrated energy major Royal Dutch Shell plc RDS.A has completed the sale of its 30% stake in the oil mining lease (OML) 18 and associated facilities in the Eastern Niger Delta.



The Shell Petroleum Development Company of Nigeria Limited (“SPDC”) – the subsidiary – sold its interest to Eroton Exploration & Production Company Limited for a cash consideration of $737 million.



The company announced that the sale is in accordance with the strategic review of SPDC’s onshore portfolio. However, Shell intends to retain its presence in both onshore and offshore Nigeria.



The area under sale – OML 18 – includes the Alakiri, Cawthorne Channel, Krakama and Buguma Creek fields and associated infrastructure. In 2014, per day production from these fields amounted to approximately 14,000 barrels of oil equivalent.



SPDC – with its 30% stake – was the operator of the joint venture project. Other parties included the Nigerian National Petroleum Corporation and affiliates of Total TOT and Eni E, with 55%, 10% and 5% stake, respectively.



The affiliates of Total and Eni have also sold their respective interests in the project to Eroton, increasing its stake in the project 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 pressured the group’s profit margins.



Currently, Shell carries a Zacks Rank #3 (Hold)., A better-ranked player from the same industry, Braskem S.A. BAK, holds a Zacks Rank #2 (Buy).





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