Shell to sell off its Canadian oil sands to Canadian Natural

Company - Vinay Mishra - Mar 09,2017

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shell to sell off its canadian oil sands to canadian natural

The deal's net worth to Shell is $7.25 billion, with this deal Shell completes $20 billion of disinvestment as it works towards its target of $30 billion by late 2018.

Royal Dutch Shell has signed a two-part deal with Canadian Natural Resources Ltd. for $7.25 billion.

In the first part of the deal, Shell will sell its Canadian oil sands assets including Peace River complex in-situ assets and a number of undeveloped assets in Alberta to Canadian Natural. This part also includes a reduction of share in the Athabasca Oil Sands Project (AOSP) of Shell from 60 percent to 10 percent. The total worth of this part is for $8.5 billion, which comprised of $5.4 billion in cash and around 98 million Canadian Natural shares presently valued at $3.1 billion.

In the second part, Shell and Canadian Natural will jointly acquire and own the Marathon Oil Canada Corporation, which also holds a 20 percent share in the Athabasca oil sands project for $2.50 billion ($1.25 billion each) in cash from Marathon Oil Corp.

Oil production from the Athabasca project before the divestment was about 150,000 barrels a day and from Peace River another 14,800 barrels a day. Shell’s total production was around 3.7 million barrels of oil a day in 2016.

This deal is expected to close by mid-2017 and is subjected to regulatory authorities’ approval.

Shell has planned to sell off assets worth $30 billion by 2018 to cut debt following, the acquisition of BG Group for $54 billion. With this deal asset of around $20 billion have been disinvested.

Other oil companies including Exxon Mobil, Statoil and Conoco Phillips have also reduced or sold their Canadian oil sand assets.

Canadian Natural would add another 3,100 employees from Shell and Marathon Oil. Among them 2,760 work at the mines, 230 are based in Calgary and 110 are on the Peace River in situ region.