Shell sells off billions in U.S. assets
Oil and gas group Shell is selling all its assets in the largest United States oil field to industry peer ConocoPhilips. The deal will bring the Anglo-Dutch company $9.5 billion. This amounts to more than 8 billion euros. This makes it one of Shell's largest sales in recent years.
Shell had been looking for a buyer for its assets in the oil and gas-rich Permian Basin region, which is largely located in western Texas. That area is known for its shale mining, where oil is extracted from rocks by injecting water, sand and chemicals into the ground with high pressure. The group owned rights in the area since 2012. It currently covers an area of more than 900 square kilometers. Shell extracts the equivalent of approximately 175,000 barrels of oil there every day.
Shell's withdrawal from the area could help it meet its sustainability goals. Shell aims to have zero net CO2 emissions by 2050. Recently, Shell has been experiencing a lot of pressure to do more on sustainability.
Shale extraction generally involves more costs than normal oil extraction. The low oil prices of recent years made it very difficult to be profitable in the area. In the corona year 2020, Shell suffered a loss of 491 million dollars on its assets. But now oil prices have risen sharply again. This makes it possible to sell the assets for a relatively favorable price.
In a statement, the company said that this is an attractive deal. Shell expects to close the transaction in the fourth quarter. From the proceeds, 7 billion dollars will be distributed among the shareholders, for example through share buybacks. Shell wants to use the rest of the money to strengthen its own balance sheet.
The move does not mean that Shell is turning its back on the United States. Shell emphasized that it's been supplying energy to American customers for more than a century. The company says it plans to remain a major energy player in the country for decades to come.
Reporting by ANP