Shell Enterprises has sold its business in the Permian basin in the US to ConocoPhillips for US$9.5 billion (€8.1 billion) in cash.
Shell’s Permian assets cover around 225,000 acres (91,000 ha), which produce 175,000 boe per day. The transaction also includes more than 600 miles (966 km) of operated crude, gas and water pipelines and infrastructure.
The company is seeking to create a more focussed portfolio through its Powering Progress strategy to take the company through the energy transition. It says it will use the proceeds of the sale to fund US$7 billion in shareholder distributions.
‘After reviewing multiple strategies and portfolio options for our Permian assets, this transaction with ConocoPhillips emerged as a very compelling value proposition. This decision once again reflects our focus on value over volumes as well as disciplined stewardship of capital. This transaction, made possible by the Permian team’s outstanding operational performance, provides excellent value to our shareholders through accelerating cash delivery and additional distributions,’ says Wael Sawan, Shell upstream director.
ConocoPhillips chairman and CEO Ryan Lance describes its purchase as ‘highly accretive’, and consistent with the company’s ‘Triple Mandate’ energy transition plan to responsibly produce energy to meet transition demand, generate compelling returns on and of capital, and achieve Paris-aligned targets and 2050 net zero ambition.
‘Our financial strength allowed us to structure a competitive offer for this transaction and we are very excited to enhance our position in one of the best basins in the world with the addition of Shell’s high-quality assets and talented workforce,’ he says, adding: ‘The assets we’re adding improve our ability to generate returns that are consistent with what investors demand through cycles. And the assets we’re adding will bring more low GHG intensity barrels to our mix. This deal hits on all the objectives of our mandate.”
The deal is expected to close in Q4 2021, subject to regulatory approval and customary closing conditions.