Can anyone explain this to me? $735 million dollars for 8000 bopd in a declining asset seems incredibly expensive.
14 replies (most recent on top)
I am a casualty of the layoffs, but are people still touting the PowerNap sludge machine as a great project?
Who needs Guyana when you can get another 15% of URSA?
They bought Permian for ~2.5 billion and invested about 3 billion more to break even after you account for the oil & gas they sold, then then they sold the asset for 9 billion. Yes, they made billions. Yes, they could have made billions more, especially if they hadn't been in a rush to sell it considering they believed the internal valuation was much higher..
Second trolling, it should be these steps:
- buy for $735 million
- give managers a bonus
- do not make any changes due to Shell structure
- Give managers a bonus for not spending money
- sell for $75 million
- give managers a bonus
@hq+1jmrdn8dm
nah it’s cool
buy high sell low is shells specialty. if you look at market value of the asset at time we sell and amount we sell for, anyway
people will still tell you we did great in the permian from start to finish and exit which is the real troll
Great! Now. let's sell it for $75 million!
Buy high then sell low.
Sorry, I couldn't help trolling
Makes cleaner to sell with out asking what they think, IMHO.
Internally, Ursa has been undervalued relative to Mars because of its lower WI. Finally someone realized the potential and put money behind it (overpaid perhaps). The asset has gone through a lot in the past few years because of poor management/decision making and underinvestment - facility issues, multiple subsurface staff leaving the company etc but seems like all that is in the rearview now. Onward and hopefully upward !
Conoco had been looking to divest Ursa for the past few years and finally it went through - seems like a great deal for them and not that good for Shell suggesting how empty the funnel is. Ursa is a cash engine for sure and the production is waterflood supported which gives its a lower than typical decline rate. It also hosts Kaikias subsea tieback which Shell owns 100% after recently buying out Japanese partner minority share. There are some development opportunities in Ursa in the waterflood and shallower stacked sands but the main remaining opportunity is a potential waterflood at Kaikias. Still $700+mil comes across as expensive
“ Increasing our stake unlocks additional opportunities for enhanced returns by giving us greater control. It is a risk-managed choice by our leadership to build on existing strengths rather than starting new assets from scratch.”
This sounds just about right for the justification that was used. It is, of course, utterly mindless buzzword drivel, so very on brand for Shell.
I believe that 8000bbl/day is related to the 15.6% share that ConocoPhillips owned. Not total per day for the entire platform.
What is the $/ reserves remaining? At the 8,000 bbl/day rate and only a 20% increase in ownership it'd take ~18 years at no decline to pay for it. Gotta drill a few wells to pay for that, on an aging and already old platform. I think the issue is the price and belief they'll ever make a profit on that.
Increasing our stake unlocks additional opportunities for enhanced returns by giving us greater control. It is a risk-managed choice by our leadership to build on existing strengths rather than starting new assets from scratch.
didn’t we buy from 40% ownership to 61% ownership?
surely that unlocks doors and ups the return?
also the leadership team is seemingly too chicken or incompetent to ever make an asset from scratch again so this is within their comfort zone