Written by StockNews.com
Royal Dutch Shell plc. (ADR) (NYSE: RDS-A) is selling nearly all of its Canadian Oil Sands interest to Canadian Natural Resources (NYSE: CNQ), in a deal that will net the company about $7.25 billion.
Shell detailed the moves via press release:
Royal Dutch Shell plc today announces the signing of two agreements by Shell Canada Energy, Shell Canada Limited and Shell Canada Resources (“Shell”)…that will see Shell sell all of its in-situ and undeveloped oil sands interests in Canada and reduce its share in the Athabasca Oil Sands Project (AOSP) from 60 percent to 10 percent. Shell will remain as operator of AOSP’s Scotford upgrader and Quest carbon capture and storage (CCS) project.
In pursuant to the deal, RDS will divest its entire 60% interest in AOSP, its 100% interest in the Peace River Complex in-situ assets, which include Carmon Creek, as well as a number of other still-undeveloped oil sands leases in northern Alberta, Canada.
The company noted the move was geared toward improving its cash position and focusing on its core businesses:
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. The proceeds will accelerate free cash flow and reduce gearing and make a meaningful contribution to Shell’s $30 billion divestment programme.”
Shell also noted that even after this large asset sale, it still maintains a strong position in Canada. The company boasts Upstream shales with a large Duvernay and Montney acreage position, and Downstream through chemicals, refining and marketing. It also has a Canadian stake in Integrated Gas with the proposed LNG Canada project.
