Shell Canada Energy, Shell Canada Limited and Shell Canada Resources (Shell) have signed two agreements to sell all of their in-situ and undeveloped oil sands interests in Canada for C$7.25bn.
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Shell will also divest its stake in the Athabasca Oil Sands Project (AOSP), thereby reducing its ownership to 10% from 60%.
The firm will, however, continue to remain the operator of AOSP’s Scotford upgrader and Quest carbon capture and storage (CCS) project.
Shell chief executive officer Ben van Beurden said: “This announcement is a significant step in re-shaping Shell’s portfolio in line with our long-term strategy.
“We are strengthening Shell’s world-class investment case by focusing on free cash flow and higher returns on capital, and prioritising businesses where we have global scale and a competitive advantage such as Integrated Gas and deep water.
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By GlobalData“The proceeds will accelerate free cash flow and reduce gearing and make a meaningful contribution to Shell’s $30 billion divestment programme.”
Under the first agreement, Shell will sell its 60% interest in AOSP and its 100% interest in the Peace River Complex in-situ assets, including Carmon Creek and multiple undeveloped oil sands leases in Alberta, Canada, to a subsidiary of Canadian Natural Resources.
Shell will receive nearly $8.5bn as consideration that includes $5.4bn in cash, with approximately 98 million Canadian Natural shares carrying a value of $3.1bn.
Shell has executed the second agreement to jointly acquire Marathon Oil Canada Corporation (MOCC) with Canadian Natural for $1.25bn each to be paid in cash. MOCC owns 20% interest in AOSP.
It is expected that Canadian Natural will be the operator of the AOSP upstream mining assets.
The transaction is anticipated to help Shell in maximising its value in Canadian downstream business.
The transactions are expected to close by the middle of this year, subject to customary closing conditions.
Shell Canada president and country chair Michael Crothers said: “We are very proud of the oil sands and in-situ operations that our people have grown in Alberta over the past several decades. These assets are an excellent fit for Canadian Natural, a highly experienced oil sands developer.
“Shell has been in Canada for more than 100 years and we plan to continue our presence as one of the country’s largest integrated energy companies.”
Shell and Canadian Natural have agreed that after the completion of these transactions, Shell may swap its 50% acquired interest of MOCC for a 20% stake in assets of the Scotford upgrader and Quest CCS project.
If this swapping is executed, Shell would fully exit AOSP’s mining operations.
Image: Athabasca oil sands in Alberta Canada. Photo: courtesy of Shell / Flickr.
