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    Shell Sells Canadian Duvernay Shale Oil Assets

Summary

The assets include a significant shale gas component.

by: Dale Lunan

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Shell Sells Canadian Duvernay Shale Oil Assets

Anglo-Dutch major Shell, through its Canadian subsidiary Shell Canada Energy, said February 17 it had reached an agreement to sell its Duvernay shale position in Alberta to Crescent Point Energy for a total consideration of US$707(C$900)mn.

The sale consideration is comprised of US$550mn in cash and 50mn Crescent Point shares, valued at US$157mn. Subject to regulatory approvals, the transaction is expected to close in April 2021 and carry an effective date of January 1, 2021.

“Divesting these assets underpins Shell’s effort to focus the upstream portfolio to deliver cash,” said Wael Sawan, upstream director at Shell. “While we believe these assets hold value, the divestment allows us to focus on our core upstream positions like the Permian Basin, with integrated value chains, thereby building a resilient, lower-risk and less complex portfolio.”

The transaction includes the transfer of approximately 450,000 net acres in the Fox Creek (Kaybob) and Rocky Mountain House (Willesden Green) areas, along with related infrastructure, currently producing around 30,000 barrels of oil equivalent (boe)/day (57% condensate, 35% shale gas and 8% natural gas liquids) from more than 270 wells.

“We are excited to add the Kaybob Duvernay asset as a strategic core area to our portfolio, as its significant inventory of high-return locations and free cash flow profile provide an attractive and return-enhancing opportunity for our shareholders,” Crescent Point CEO Craig Bryksa said.

The announced Shell-Crescent Point transaction was the second Duvernay deal February 17, following Denver-based Ovintiv’s sale of its 10,000 boe/day of Duvernay shale assets for US$263mn.