Royal Dutch Shell has agreed to sell its non-core oil and gas assets in Western Canada to Tourmaline Oil for $1.037bn (£848m). The Anglo-Dutch company which is headquartered in the Netherlands and incorporated in the UK announced the same on Thursday (20 October).
As part of the deal, Shell will receive a consideration of $758m in cash and Tourmaline shares worth $279m. Shell said while the deal was subject to regulatory approvals, it was expected to close in the fourth quarter of 2016.
Shell added that the sale will happen through its affiliate Shell Canada Energy. As part of the deal Shell will sell 61,000 net acres of oil and gas property in the Gundy area of Northeast British Columbia and 145,000 net acres in the Deep Basin area of West Central Alberta, both of which are located in Canada.
The company further said that these assets included a combination of both developed and undeveloped lands along with related infrastructure. It said these assets were currently producing 24,850 barrels of oil equivalent a day (boe/d).
This follows Shell's plan to cut more spending than earlier estimated and exit up to 10 countries as a result of its £35bn ($42.81bn) acquisition of BG Group. The Hague-headquartered company revealed the same on 7 June while presenting an update on its long-term strategy to investors.
While it had not mentioned then the countries it would exit, it had said it would cut $4.5bn of spending before tax in 2018. This was up from the $3.5bn target it had previously disclosed.
In a statement, Andy Brown, Shell's upstream director commented on the latest sale as, "Shell retains a significant shale position in Canada and we are actively working to mature our attractive core asset base in the Montney and Duvernay. At the same time we are strengthening our shales business and creating shareholder value by selling assets that do not fit our near-term development plans."
In a separate statement, Tourmaline said it would benefit from this deal. The Canadian company said that the acquisition marked an important step in the company's ongoing plan to become "not only become Canada's, but also one of North America's, largest, lowestcost and most-profitable natural gas and liquids producers."