Royal Dutch Shell (LON:RDSA) has inked a deal to offload $7.25 billion of oil sands in Canada, the blue-chip group has said. The move comes with the Anglo-Dutch group looking to sell $30 billion worth of assets in the wake of its acquisition of BG Group.
Shell’s share price lost ground in yesterday’s session, shedding 0.91 percent to close at 2,126.00p, underperforming the benchmark FTSE 100 index which shed 4.38 points to end the session 0.06 percent lower at 7,334.61. The group’s shares have gained more than 28 percent over the past year, as compared with an 18-percent rise in the Footsie.
Shell announced in a statement this morning that it had inked two agreements which will see the company divest all of its in-situ and undeveloped oil sands interests in Canada and reduce its share in the Athabasca Oil Sands Project from 60 percent to 10 percent. The combination of these transactions will result in a net consideration of $7.25 billion to the Anglo-Dutch oil major.
“This announcement is a significant step in re-shaping Shell’s portfolio in line with our long-term strategy,” the group’s chief executive Ben van Beurden commented in the statement, adding that the proceeds from the deal “will accelerate free cash flow and reduce gearing and make a meaningful contribution to Shell’s $30 billion divestment programme”.
The divestment comes after van Beurden recently told Bloomberg in an interview that while the group’s existing oil-sands operations generated strong cash flows, the expense of developing new projects discouraged additional investments. By contrast, Reuters reported earlier this week that the Anglo-Dutch oil major was planning to make shale oil and gas in the US, Canada and Argentina a key engine of growth in the next decade, with shale being cheaper and faster to develop.