Shell signs agreement to sell Permian interest for $9.5 billion to ConocoPhillips
20 September 2021 - 10:35PM
Shell signs agreement to sell Permian interest for $9.5 billion to
ConocoPhillips
HOUSTON (September 20, 2021) − Shell
Enterprises LLC, a subsidiary of Royal Dutch Shell plc, has reached
an agreement for the sale of its Permian business to
ConocoPhillips, a leading shales developer in the basin, for $9.5
billion in cash. The transaction will transfer all of Shell’s
interest in the Permian to ConocoPhillips, subject to regulatory
approvals.
"After reviewing multiple strategies and
portfolio options for our Permian assets, this transaction with
ConocoPhillips emerged as a very compelling value proposition,"
said Wael Sawan, Upstream Director. "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
our shareholder distributions in the range of 20-30% of cash flow
from operations. The effective date of the transaction is
July 1, 2021 with closing expected in Q4 2021.
Shell has been providing energy to U.S.
customers for more than 100 years and plans to remain an energy
leader in the country for decades to come.
Notes to Editors
- Shell’s Permian business includes ownership in approximately
225k net acres with current production of around 175 thousand
barrels equivalent per day.
- This transaction constitutes a Class 2 transaction for RDS plc
under the UK Listing Rules. The gross assets that are subject
of this transaction amounted to $10.5 billion December 31,
2020. The Permian business recorded a before-tax operating
loss of $491 million for the year ended December 31, 2020.
The transaction is expected to result in an after-tax gain of $2.4
to $2.6 billion, subject to adjustments.
- A further update to Shell’s oil production outlook and
portfolio will be provided with fourth quarter earnings.
- Majority of Midland-based Permian employees and many
Houston-based employees will be offered employment by
ConocoPhillips with effect upon closing in accordance with the
terms and conditions of the transaction.
- Since 2017, Shell’s Permian operations have reduced green house
gas and methane intensity by 80% through investment in
infrastructure and technology.
- Morgan Stanley & Co. LLC and Tudor, Pickering, Holt &
Co. are serving as Shell’s financial advisors and Norton Rose
Fulbright is serving as Shell’s legal advisor for the
divestment.
- Shell is one of America’s leading energy companies with
interests in 50 states employing more than 15,000 people. Shell’s
U.S. portfolio of operated companies and interests consists of oil,
natural gas, petrochemicals, gasoline, lubricants, and other
refined products along with renewables such as wind, solar, and
mobility options like electric vehicle charging and hydrogen. In
the U.S. Shell is also investing in an integrated power business
that will provide electricity to millions of homes and
businesses.
ENDS
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Media Americas: +1 832 337 4355
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September 20, 2021. Neither Royal Dutch Shell plc nor any of its
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21380068P1DRHMJ8KU70
Classification: Inside Information
This announcement contains inside
information.
September 20, 2021
Contacts:
- Linda M. Coulter, Company Secretary
- Media: International +44 (0) 207 934 5550; USA
+1 832 337 4355