Shell New Zealand swaps assets with Todd as it moves towards sale

Thursday, 6 April 2017

Shell announced its New Zealand business could be sold at the end of 2015.

Shell is taking over its long running joint venture with the Todd Corporation to make it easier to sell its New Zealand assets.

On Thursday, Shell announced that Todd Energy would take over the Kapuni gas field in Taranaki. Previously the field, discovered in 1959, was owned 50/50 by the two parties.

When he announced that Shell New Zealand could be put up for sale, chairman Rob Jager said the company was 'part of who I am'. Jager began working for the company in 1978.

At the same time, Shell will take complete ownership of Shell Todd Oil Services, the oil field operating company which the two companies have owned together since 1955.

Chairman Rob Jager said the transaction would make the process of selling its other assets more straightforward.

'This 100 per cent ownership of STOS will simplify Shell's operational structure in preparation for any possible portfolio changes to the remaining assets,' Jager said on a conference call with journalists.

The terms of the sale were confidential and the sale was subject to regulatory clearance, Jager said.

In December 2015 Shell announced a review of its New Zealand assets, which could mean a complete sale of the business. Shell has been operating in New Zealand for more than a century.

Jager said the asset swap was the first 'concrete step' in the review of its assets, and marked a significant milestone for the company.

'Shell now will continue to explore divestment options for the remaining assets and interests in New Zealand, with the assistance of [investment bank] JP Morgan.'

In its 2015 financial results, the last which are publicly available, Shell New Zealand reported a loss of $184.8 million as global oil prices plunged. Its revenues fell by more than $500m to $804.5m.

Todd Energy, owned by the Todd Corporation, said in a statement that the transaction 'strengthened its commitment to Taranaki natural gas production'.

'We are very pleased to increase our stake in the Kapuni natural gas field,' Todd Energy chief executive Dr Joanna Breare said.

'This transaction is consistent with Todd Energy's focus on the development of New Zealand's onshore natural gas resources and our commitment to the Taranaki region.'

About 50 Kapuni staff employed by both Shell and STOS will be offered positions with Todd, which will take over as operator of the aging gas field.

Jager said the transaction was not the end of Shell relationship with Todd Energy, with the two companies both holding stakes in other gas fields, including the Maui field, one of the largest in the world at the time of its discovery.