Royal Dutch Shell raises US$7.2bn from Canadian oil sands disposal

Oil giant Royal Dutch Shell PLC (LON:RDSA) is raising US$7.2bn through the sale of its almost all its oil sands interests in Canada, with the firm to just retain a 10% stake in the Athabasca Oil Sands Project (AOSP).

A subsidiary of Canadian Natural Resources Limited (TOR:CHQ) will acquire Shell’s current 60% interest in AOSP, its 100% interest in the Peace River Complex in-situ assets, including Carmon Creek, and a number of undeveloped oil sands leases in Alberta, Canada.

Shell will receive approximately US$8.5bn (C$11.1bn) from Canadian Natural, comprised of US$5.4bn in cash plus around 98 mln Canadian Natural shares currently valued at US$3.1bn.

Separately, under a second agreement, Shell and Canadian Natural will jointly acquire and own equally Marathon Oil Canada Corporation, which holds a 20% interest in AOSP, from an affiliate of Marathon Oil Corporation (NYSE:MPC) for $1.25bn each in cash.

The combination of these transactions will result in a net consideration to the Anglo-Dutch firm of US$7.25bn.

Portfoilo reshaping … 

Shell will remain operator of AOSP’s Scotford refinery and Quest carbon capture and storage project, with Canadian Natural signing a long-term supply agreement with the refinery.

The transactions are expected to close mid-2017, subject to regulatory approvals.

Shell’s 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.”

He added: “The proceeds will accelerate free cash flow and reduce gearing and make a meaningful contribution to Shell’s US$30bn divestment programme.”

Story by ProactiveInvestors