The embattled Royal Dutch/Shell Group said last Thursday its exploration business will take a charge to earnings of about $330 million after tax in the second quarter, and that its oil product division sold its Midwest refined product pipeline system and storage assets in the United States for $530 million.
The company, which is 60% owned by The Hague, Netherlands-based Royal Dutch Petroleum Co. and 40% by Shell Transport and Trading Co. Plc in London, said its exploration and production unit was taking the charge on various exploration assets after drilling several unsuccessful wells in parts of the North Sea and completing extensive geological studies. It acquired the exploration assets in its takeover of Enterprise Oil Plc in 2002.
Royal Dutch/Shell Group said its proved oil and natural gas reserves, which have been cut three times this year, will not be affected by the second-quarter charge.
The company’s oil products division announced the sale of its product pipeline and storage assets located in Illinois, Indiana, Ohio, Michigan and Wisconsin to Buckeye Partners LP for $530 million. This follows the recent sale of its Texas and Great Plains product pipeline and storage assets in the U.S. for $492 million. The transaction is expected to close in the third quarter following the appropriate regulatory approval, it said.
In addition, Royal Dutch/Shell Group announced the proposed sale of its Peruvian retail, commercial and marine businesses, which it said is due to be completed later this year.
“The combined financial effect of these announcements is expected to be broadly neutral in terms of their combined contribution to net income for the year,” with the exception of the second-quarter charge, the company said in a press statement.
So far this year, the company said proceeds from confirmed and disclosed sales (excluding proposed sales) have totaled $3.5 billion, of which $1.7 billion was raised in the first quarter.
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