Chevron in talks to sell Rosebank stake

Commenting on Chevron’s announcement that it is in talks to sell its 40% operating stake in the Rosebank field, West of Shetland, Ross Cassidy, senior research manager, North Sea upstream, said: “Any buyer for Chevron's stake in Rosebank will need to have very deep pockets to fund the capital cost of development, which we estimate at more than US$6 billion in total.

“This could mean another large player looking to increase their exposure in West of Shetlandor one of the largest private equity companies that have come on the scene recently.”

He added: “Any future development will likely involve a new-build, harsh environment floating production, storage and offloading vessel and up to 20 production wells.

“If a final investment decision (FID) is taken in 2019, first oil could be in 2024, rising to around 100,000 barrels of oil equivalent per day at peak production.”

Rosebank was discovered in 2004 around 125 kilometres west of the Shetland Islands, offshore the UK. It is the largest undeveloped field in the UK upstream sector, with estimated reserves of over 300 million barrels of oil equivalent.

Mr Cassidy added: “Any future development will be challenging as the field is located in water depths of more than 1,000 metres, in a very harsh environment, with high winds and waves to contend with.    

“Chevron has been weighing up development options for a number of years, but has yet to take FID.  The asset may be struggling to compete for capital within Chevron’s low breakeven tight oil portfolio, focused on the US Permian basin. But a sale would reduce Chevron’s pool of conventional growth opportunities, increasing its dependence on delivering in the Permian.

“Chevron is actively reducing its European portfolio. On 25 September, it was announced that Total will acquire Chevron's Danish upstream business. The company is also looking to sell other assets in its UK North Sea portfolio.”