Shell to Divest Further $7.5bn Canada Assets
Shell for a net consideration of US$7.25bn has agreed to sell all of its in-situ and undeveloped oil sands interests in Alberta, western Canada, and to reduce its share in the Athabasca Oil Sands Project (AOSP) there from 60% to 10%.
It will however remain operator of AOSP's Scotford upgrader and Quest carbon capture and storage (CCS) project, capable of sequestering 1.1mn metric tons/yr of carbon dioxide. Shell is keen to publicise its experience in developing and operating this major CCS facility.
The larger transaction, including 60% of AOSP, will be to Canadian Natural Resources Limited for $8.5bn (C$11.1bn), comprised of $5.4bn cash plus 98mn CNRL shares currently valued at $3.1bn. It is envisaged that CNRL will take over as AOSP operator, except for the upgrader and CCS.
Separately Shell and CNRL will jointly acquire Marathon Oil Canada Corporation, which holds 20% in AOSP, from Marathon Oil for $1.25bn cash each (so a total of $2.5bn to Marathon).
Shell CEO Ben van Beurden said the company is “prioritising businesses where we have global scale and a competitive advantage such as Integrated Gas and deep water” and that proceeds from the Canadian sales would “make a meaningful contribution to Shell's $30bn divestment programme."
(Credit: CNRL)
CNRL’s core areas of operation include Western Canada, the UK North Sea and offshore Africa, the latter including the Espoir and Baobab gasfields (Cote d’Ivoire), Olowi oil field (Gabon) and South Africa’s 19,000 km2 exploration block 11B/12B.
In October 2016, Shell agreed to sell non-core oil and gas assets in Western Canada to Tourmaline Oil Corp for just over US$1bn.
Added later March 9: Marathon Oil not only agreed to sell its 20% stake in AOSP for a total of US$2.5bn but also to acquire 70,000 acres net in the Permian basin (the Northern Delaware shale in New Mexico) from BC Operating, Inc. and other entities for $1.1bn cash, excluding closing adjustments.
Mark Smedley