The company will sell all of its oil-sands interests apart from a 10 percent stake in the Athabasca Oil Sands mining project, The Hague-based Shell said Thursday. It will also continue as operator of the Scotford upgrader and Quest carbon capture and storage project.
The Anglo-Dutch producer is part-way through a $30 billion divestment program to reduce debt, which soared following its $54 billion acquisition of BG Group Plc last year. The company sold $5 billion of assets in 2016, and this week clinched $2.2 billion from the breakup of a refining partnership with Saudi Arabian Oil Co. Chief Executive Officer Ben Van Beurden said last month that Shell was unlikely to take on new high-cost oil-sands projects after the crude price slump.
“This announcement is a significant step in re-shaping Shell’s portfolio,” Van Beurden said in a statement. “The proceeds will accelerate free cash flow and reduce gearing and make a meaningful contribution to Shell’s $30 billion divestment program.”
The company will sell to a unit of Canadian Natural Resources Ltd. its entire 60 percent interest in the Athabasca project, all of the Peace River Complex in-situ assets — which extract crude without mining — and a number of undeveloped leases in Alberta. Those disposals will fetch about $8.5 billion, comprising cash and shares.
Under a second agreement, Shell and Canadian Natural will jointly acquire and own Marathon Oil Canada Corp., which holds a 20 percent interest in the Athabasca project, from an affiliate of Marathon Oil Corp. for $1.25 billion each, to be settled in cash.
The transactions are expected to close in mid-2017, subject to regulatory approvals.
Oil sands, the reserves of heavy crude found primarily in northern Alberta, are expensive to extract and have fallen out of favor following the market collapse. They have also been a target of environmental campaigners due to the greenhouse-gas emissions generated from the production and processing required to produce synthetic crude.