Shell divests oil sands interests in Canada in C$11.1B transaction
May 31, 2017
11.10 Billion CAD
On March 9, 2017, Royal Dutch Shell plc announced the signing of two agreements by Shell Canada Energy, Shell Canada Limited and Shell Canada Resources (“Shell”) that will see Shell sell all of its in-situ and undeveloped oil sands interests in Canada and reduce its share in the Athabasca Oil Sands Project (AOSP) from 60% to 10%. Shell will remain as operator of AOSP’s Scotford upgrader and Quest carbon capture and storage (CCS) project.
Under the first agreement, Shell will sell to a subsidiary of Canadian Natural Resources Limited (“Canadian Natural”) its entire 60% interest in AOSP, its 100% interest in the Peace River Complex in-situ assets, including Carmon Creek, and a number of undeveloped oil sands leases in Alberta, Canada. The consideration to Shell from Canadian Natural is approximately US$8.5 billion (C$11.1 billion), comprised of US$5.4 billion in cash plus around 98 million Canadian Natural shares valued as of signing at US$3.1 billion. Canadian Natural is one of Canada’s largest energy companies and a leader in the oil sands, with a market capitalisation of approximately US$35 billion (C$46 billion).
Separately and under the second agreement, Shell and Canadian Natural will jointly acquire and own equally Marathon Oil Canada Corporation (“MOCC”), which holds a 20% interest in AOSP, from an affiliate of Marathon Oil Corporation for US$2.5 billion ($1.25 billion each), to be settled in cash. Shell and Canadian Natural have agreed that, subject to closing of the transactions and additional further conditions, Shell may swap its 50% purchased interest of MOCC for a 20% interest in assets of the Scotford upgrader and Quest CCS project.
McCarthy Tétrault LLP is advising Shell with a team led by Craig Spurn and Cathy Samuel that includes Ben Aberant, Gord Baird, Randy Bauslaugh, Mike Bennett, Paul Boniferro, Oliver Borgers, Jeremy Busch-Howell, Gord Cameron, Will Cascadden, Paul Cassidy, Sean Collins, Gary Girvan, Kristen Haines, Don Houston, Kim Howard, Pavan Jawanda, Ben Layton, Walker Macleod, Ron Mar, Steven Molnar, Robert Nearing, Michelle Siu, Shea Small, Kara Smyth, Theo Stathakos, Roger Taplin, Justin Turc, Shana Wolch and Dex Zucchi.