Royal Dutch Shell PLC has sold its stake in a controversial Irish gas field for up to $1.23 billion to one of Canada's biggest pension funds, but the deal will result in a $350 million impairment charge, the company said Wednesday.
Shell led the development of the Corrib gas field, located in the Atlantic Ocean about 52 miles off the coast of rural County Mayo. The field began pumping in 2015 after years of delays.
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A subsidiary of the Canada Pension Plan Investment Board will take control of Shell's 45% interest in Corrib. Vermillion Energy, a Calgary-based oil-and-gas producer, will become the new operator of the field. The transaction is for $947 million initially with payments of up to $285 million between 2018 and 2025, depending on gas prices and production.
Shell said the sale was consistent with its plan to sell off $30 billion in assets by 2018. In a news release, Andy Brown, a top Shell executive, said the company has announced deals valued at over $20 billion.
"This transaction is part of our strategy to reshape Shell and to deliver a world class investment case," Mr. Brown said.
The company said the transaction will result in an impairment charge of about $350 million, which will be reflected in its second-quarter earnings. The company said a $400 million "negative non-cash Cumulative Currency Translation Difference" will be released when the deal is completed.
The company will maintain a presence in Ireland through an aviation joint venture, Shell and Topaz Aviation Ireland Limited, based near Dublin airport.
Shell acquired the company that discovered Corrib in 2002, but the British-Dutch firm's plans to build an onshore pipeline to transport the field's gas to a terminal it would construct at Bellanaboy in County Mayo met with fierce local opposition. That resistance focused on concerns about the safety of the pipeline and its effects on the environment. It led to changes to the pipeline's path, including routing it through a 4.9 kilometer (3 miles long) tunnel, the longest in Ireland, that increased the project's costs and forced delays.
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(END) Dow Jones Newswires
July 12, 2017 06:11 ET (10:11 GMT)