In terms of transformation path and oil and gas asset disposal, European and American oil companies once again presented completely different choices. On September 20, local time, Royal Dutch Shell (Shell) announced that it has agreed to sell all its assets in the Permian Basin (Permian), the main producing area of shale oil in the United States, to the world’s largest independent oil and gas company for US$9.5 billion in cash. ConocoPhillips (ConocoPhillips), the transaction still requires regulatory approval.
This move marks the acceleration of Shell’s business focus to low-carbon assets, and at the same time makes ConocoPhillips headquartered in Houston become a pioneer natural resources company in terms of production. One of the largest producers in the Permian period rivaled by Buddha.
The Permian Basin, which straddles West Texas and New Mexico, is the world’s busiest shale producing area, accounting for nearly half of the oil production in the United States. The core engine of the rock oil and gas boom. In the past decade or so, shale technology has stimulated an upsurge of oil and gas development in the Permian, Bakken, and Eagle Beach areas of the United States, making the United States the world’s largest oil producer.
Shell has 225,000 acres of shale development area in the Permian Basin, and its current daily output is about 175,000 barrels of oil equivalent, accounting for approximately its total global oil and gas last year. 6% of production. ConocoPhillips said in a statement that it expects to produce approximately 200,000 barrels of oil equivalent per day from these assets next year. ConocoPhillips is very interested in the region. In the wave of bankruptcy mergers and acquisitions in the shale oil industry following the plunge in oil prices, ConocoPhillips announced in October last year that it would acquire competitor Concho Resources for a US$9.7 billion all-stock transaction, ranking it second in one fell swoop. The top shale oil producer in the Peripheral Basin. With rising oil prices, shale oil and gas production in the region is recovering.
Shell’s upstream business director Wael Sawan said that the transaction with ConocoPhillips was “a compelling value proposition” and was a review of Permian Basin assets. A choice made after a variety of development strategies and portfolio options. The data disclosed by the company shows that due to the sharp drop in oil prices caused by the new crown pandemic last year, its Permian business recorded a pre-tax operating loss of US$491 million in 2020. Shell said that the cash proceeds from the transaction will be used to distribute $7 billion in funds to shareholders after the transaction is completed, to further strengthen its balance sheet, and to be used in its “energy transition” plan.
As one of the world’s largest international oil companies, Shell, one of the world’s largest international oil companies, is re-allocating its assets when it withdraws from the Permian. The executive director of Shell’s downstream business Huibert (Huibert Vigeveno) once told the news (www.thepaper.cn)) Said that the company’s total oil production is declining at an annual rate of 1%-2% (including divestiture and natural decline). However, in the process of realizing the energy transition, the 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 with Shell as a typical focus on acquiring and developing oil and gas The price and return of the project are closely linked. However, as the supply of carbon-based energy products decreases, Shell will gradually transform into an energy company that “provides low-carbon or zero-carbon energy products, and provides risk management and related services.”
The sale of shale assets highlights the growing gap between European oil companies and their American 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 global deployment of renewable energy and low-carbon power assets.
In May of this year, the Dutch District Court of The Hague issued a ruling requiring Shell to reduce its net carbon emissions by 45% by 2030 compared to 2019 levels. This is The first such ruling in the world. Shell appealed this and said it would seek to strengthen its energy transition strategy.