Royal Dutch Shell today announced the successful completion of the acquisition of Repsol SA's liquefied natural gas (LNG) portfolio outside North America for a headline cash consideration of $4.1 billion (B).
As part of the transaction, Shell will assume $1.6 B of balance sheet liabilities relating to existing leases for LNG ship charters, substantially increasing the shipping capacity available to Shell's LNG marketing business.
The deal gives Shell an additional 7.2 million metric tons per year (metric MMtpy) of directly managed LNG volumes. The company's portfolio will be boosted with LNG supply in the Atlantic from Trinidad and Tobago, and in the Pacific from Peru.
Since the announcement of the transaction in February 2013, value adjustments have been made in accordance with the terms of the sales and purchase agreement. These adjustments are expected to lead to a net cash purchase price of $3.8 B, compared to purchase price of $4.4 B announced in February 2013, and balance sheet liabilities of $1.6 B, compared to $1.8 B at the initial announcement.
This includes the exercise of pre-emption rights of the BBE power plant in Spain by an existing partner, as well as other adjustments, such as the financial performance of the portfolio and working capital movements since the effective date of October 1, 2012.
The deal closed in 2014. Shell's capital investment in the fourth quarter of 2013 will reflect $3.4 B for this transaction, with the remainder of $2 B booked in 2014, of which $1.6 B is a non-cash item relating to finance ship leases.