Canadian Natural Resources is purchasing all of Shell’s operated upstream oilsands assets as well as non-operated leases, and Marathon Oil Corporation's stake in the Athabasca Oil Sands Project, (AOSP) for consideration of $12.74 billion, the company said today.
The centerpiece of the deal is that Canadian Natural will become operator of the AOSP, taking over Shell’s 60 percent majority ownership.
The AOSP started operating in 2002 and has current capacity of 255,000 bbls/d of synthetic crude oil through its integration with Shell’s Scotford Upgrader.
Canadian Natural will become 70 percent owner and operator of the AOSP, as an agreement has also been made for Canadian Natural and Shell to acquire Marathon Oil Corporation’s 20 percent share. Indications are that Shell will retain a 10 percent ownership piece.
Canadian Natural will also become 70 percent owner of the Scotford Upgrader (Shell will remain the operator) and 100 percent owner of Shell’s Peace River and Cliffdale in situ operations.
The deal adds more than 200,000 bbls/d to Canadian Natural’s portfolio, which should increase its overall volumes to over one million boe/d (production was 859,577 boe/d in the fourth quarter of 2016).
It also adds 3,100 employees from Shell and Chevron, including 2,760 at the mines, 110 in the Peace River region and 230 in Calgary.
"It is a rare opportunity to be able to acquire a world class oilsands mining and upgrading asset like AOSP,” Canadian Natural CFO Corey Bieber said in a statement.
Once a major proponent of oilsands development, Shell has been backing away from further development of its assets in recent years, withdrawing its application for the proposed 200,000 bbl/d Pierre River mine in early 2015 and cancelling construction of its 80,000 bbl/d Carmon Creek in situ plant near Peace River later in the year.
Canadian Natural, which in contrast is in the midst of a 140,000 bbl/d expansion of not just bitumen but synthetic crude oil production, has become owner of both Pierre River and Carmon Creek.
It also gets the AOSP’s proposed 100,000 bbl/d Jackpine Mine expansion, which already has regulatory approval.
Canadian Natural emphasized the opportunities present to optimize efficiencies between both the AOSP and its Horizon project, which are located in relatively close proximity north of Fort McMurray.