Royal Dutch Shell PLC is well on its way to transforming its fleet to focus on more prolific production areas, as the Anglo-Dutch oil major finalizes its two-year plan started in 2016 to divest $30 billion in noncore assets through 2018.
Capturing the 2017 recovery in oil prices and maintaining a disciplined spending strategy, Shell's divestment plan also served to generate cash flow for share buybacks, dividends and to help pay for its more than $50-billion acquisition of BG Group PLC that was originally announced in 2015.
In the third quarter of 2018, Shell's capital investments totaled about $5.8 billion, as the major looked to branch out in the attractive Permian Basin. Shell first entered the Permian in 2012 in partnership with Anadarko Petroleum Corp. and currently has operations covering around 280,000 net acres, which is solid but still dwarfed by some of its competitors that have been building a presence in the basin for a decade or longer.
In early December 2018, following a string of Permian-based deals across the industry, Bloomberg said that Shell was in early talks to buy Texas-based oil producer Endeavor Energy Resources LP for about $8 billion. Endeavor holds more than 300,000 acres of mostly undeveloped land in the basin. Exxon Mobil Corp., ConocoPhillips and Chevron Corp. are also said to be possible contenders for Endeavor.
"Not only is there a lot of uncertainty as to who will buy Endeavor, but with the decline in oil prices over the past few months, it remains uncertain whether a sale will take place at all. There is a not-insignificant chance that the sellers could delay the transaction until the commodity price environment improves," Raymond James analyst Muhammed Ghulam said in a Jan. 4 email.
With 2018 in the rear view mirror, S&P Global Market Intelligence provides a rundown of Shell's major completed asset sales since 2016.
In October 2016, Shell closed the sale of its 100% stake in the Brutus/Glider assets in the Gulf of Mexico to EnVen Energy Ventures LLC. In November 2016, Shell agreed to divest 206,000 net acres of oil and gas assets in western Canada to Tourmaline Oil Corp.
In May 2017, Shell sold in-situ and undeveloped oil sands interests in Canada to Canadian Natural Resources Ltd. for $5.3 billion in cash and 98 million Canadian Natural shares valued at $3.0 billion. In August 2017, Shell divested its 50% stake in Saudi Petrochemical Company to Saudi Basic Industries Corp.
In November 2017, Shell agreed to sell its stake in Woodside Petroleum Ltd., and it completed the sale of its Gabon onshore oil and gas interests to Assala Energy Holdings Ltd. That same month, Shell completed the sale of several North Sea fields to Chrysaor Ltd.
In March 2018, Shell EP Middle East Holdings B.V. sold Shell Iraq B.V., which held a 19.6% stake in the West Qurna 1 oil field, to a subsidiary of Itochu Corp. In May, Shell said it would divest its entire stake in Canadian Natural Resources.
In June, subsidiaries of Shell completed the sale of their 22.22% interest in the Bongkot field and acreage offshore Thailand to PTT Exploration and Production Public Co. Ltd. and PTTEP International Ltd. Also, Shell Gas (LPG) Holdings B.V. closed on the sale of its 15% stake in Malaysia LNG Tiga Sdn Bhd to Sarawak State Financial Secretary.
In December, Shell Overseas Holdings Ltd. divested Shell E&P Ireland Ltd. to CPP Investment Board Europe S.a.r.l.
Also, in December, affiliate A/S Norske Shell sold its 44.56% interest in the Draugen field and 12% stake in the Gjøa field in Norway to OKEA AS. Shell also sold its shares in entities in New Zealand and its interest in the Great South Basin venture to OMV New Zealand Ltd., a subsidiary of OMV AG.