Royal Dutch Shell (RDS.A) said Thursday that it will significantly reduce its assets in Canada's controversial oil sands area in the province of Alberta as it continues to slim it global portfolio and reduce debts.
Shell will its 60% interest in the Athabasca Oil Sands Project (AOSP) and its 100% interest in its Peace River Complex, along with other assets in Alberta, to Canadian Natural Resources Ltd. (CNQ) for around $8.5 billion in cash and shares. The two companies will also take an equal stake in Marathon Oil Canada Corporation, a subsidiary of Marathon Oil Corp. (MRO) , which has a 20% stake in AOSP, for $1.25 billion.
The transactions will take Shell's holding to around 10%, the company said, while the net consideration for Shell from the two deals will come to $7.25 billion.
"This announcement is a significant step in re-shaping Shell's portfolio in line with our long-term strategy. We are strengthening Shell's world-class investment case by focusing on free cash flow and higher returns on capital, and prioritising businesses where we have global scale and a competitive advantage such as Integrated Gas and deep water." said CEO Ben van Beurden. "The proceeds will accelerate free cash flow and reduce gearing and make a meaningful contribution to Shell's $30 billion divestment programme."
Shell shares fell 3.18% to change hands at 2,058 pence each by 11:00 GMT in London, erasing all the gains earned over the past three months, although much of today's reaction is linked to Wednesday's 5% collapse in global crude prices.