Shell completes divestment of Canadian oil sands interests

Royal Dutch Shell has completed two previously announced agreements to sell all its in-situ and undeveloped oil sands interests in Canada and reduce its share in the Athabasca Oil Sands Project (AOSP) from 60% to 10%.

Under the first agreement, Shell has completed the sale to a subsidiary of Canadian Natural Resources its entire 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. The consideration to Shell from Canadian Natural is approximately $8.2bn (C$10.9bn), comprised of $5.3bn in cash plus around 98 million Canadian Natural shares currently valued at $2.9bn.

Canadian Natural will operate the AOSP upstream mining assets, while Shell will continue as operator of the Scotford upgrader and Quest carbon capture and storage (CCS) project, located next to the 100% Shell-affiliate-owned Scotford refinery and chemicals plants.

Separately and under the second agreement, Shell and Canadian Natural have completed the joint acquisition and now own equally Marathon Oil Canada Corporation (MOCC), which holds a 20% interest in AOSP, from an affiliate of Marathon Oil Corporation for $1.25bn each.

Shell retains significant operations in Canada that are not affected by these transactions, including upstream shales, with large acreage positions in the Duvernay and Montney formations; downstream through chemicals, refining and marketing; and in integrated gas with the proposed LNG Canada project.

Petroleum Review will be taking a closer look at the Canadian and US oil and gas sectors in the July 2017 issue.