Shell agrees to sell shale assets to ConocoPhillips for $9.5 billion in cash

On September 20, Royal Dutch Shell announced that it had agreed to sell all of its assets in the Permian Basin, the main U.
S.
shale oil producing area, to ConocoPhillips, the world’s largest independent oil and gas company, for $9.
5 billion in cash.
ConocoPhillips), which is still subject to regulatory approval and is expected to close in the fourth quarter of this year
.

The move marks an accelerated shift in Shell's focus to low-carbon assets and makes Houston-based ConocoPhillips one of the largest producers in the Permian, rivaling Pioneer Natural Resources and Chevron in output
.

It is understood that the Permian Basin is the center of the shale industry in the United States, and Shell has a shale development area of ​​225,000 acres in the Permian Basin, and the current daily output is about 175,000 barrels of oil equivalent, accounting for about 175,000 barrels of oil equivalent in its global oil and gas last year.
6% of the total output
.
The assets are expected to produce about 200,000 barrels of oil equivalent per day by next year, ConocoPhillips said in a statement
.
ConocoPhillips is very interested in the region.
In the wave of bankruptcies and mergers and acquisitions in the shale oil industry after the oil price crash, ConocoPhillips announced in October last year that it would buy rival Concho Resources in an all-stock deal of US$9.
7 billion.
Top shale oil producer in the Lacian Basin
.
Shale oil and gas production in the region is recovering as oil prices rise
.

Wael Sawan, Shell's director of upstream operations, said the ConocoPhillips deal was "a compelling value proposition" and was chosen after reviewing multiple development strategies and portfolio options for the Permian Basin assets
.
Data disclosed by the company showed its Permian business posted a pretax operating loss of $491 million in 2020 as a result of last year’s slump in oil prices due to the coronavirus pandemic
.
Shell said the cash proceeds from the deal will be used to distribute $7 billion to shareholders, further strengthen its balance sheet and for its "energy transition" plan after the deal closes
.

Shell, one of the world's largest international oil companies, is reconfiguring its assets as it pulls back from the Permian
.
Huibert Vigeveno, executive director of Shell's downstream business, has said that the company's total oil production is declining at an annual rate of 1%-2% (including divestitures and natural declines)
.
However, in the process of realizing energy transformation, traditional upstream business is still "absolutely necessary" for Shell, which can provide continuous cash flow for the company to invest in low-carbon fuels, renewable energy and other future growth businesses
.

Traditionally, multinational oil and gas companies such as Shell have focused on acquiring and developing oil and gas assets, and then providing related products, which are closely linked to commodity prices and project returns
.
But as the supply of carbon-based energy products dwindles, Shell will gradually transform into an energy company that "provides low-carbon or zero-carbon energy products, and provides risk management and related services
.
" All in all, it is another step for Shell to shift its focus from traditional oil and gas to renewable energy production
.

The sale of shale assets underscores the growing differentiation between European oil companies and their U.
S.
counterparts, who continue to bet on the future of oil and gas
.
In recent years, European oil giants such as Shell, bp, and Total Energy have accelerated their deployment of renewable energy and low-carbon power assets on a global scale
.