PERTH (miningweekly.com) – Oil and gas major Shell has struck a $9.5-billion agreement to sell its Permian business to ConocoPhillips, subject to regulatory approvals.
Shell’s Permian business includes ownership in approximately 225 000 acres with current production of around 175 thousand barrels equivalent a day.
"After reviewing multiple strategies and portfolio options for our Permian assets, this transaction with ConocoPhillips emerged as a very compelling value proposition," said Shell upstream director Wael Sawan.
"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."
Shell’s Upstream business plays a critical role in the Powering Progress strategy through a more focused, competitive and resilient portfolio that provides the energy the world needs today whilst funding shareholder distributions as well as the energy transition.
The cash proceeds from this transaction will be used to fund $7-billion in additional shareholder distributions after closing, with the remainder used for further strengthening of the balance sheet. These distributions will be in addition to shareholder distributions in the range of 20% to 30% of cash flow from operations.
The effective date of the transaction is July 1, 2021 with closing expected in the fourth quarter of 2021.
Shell said this week that the majority of Midland-based Permian employees and many Houston-based employees would be offered employment by ConocoPhillips at the closing of the transaction.