Shell, a subsidiary of the Royal Dutch Shell based in the Netherlands, hands roughly 225,000 acres of their property over to ConocoPhillips.
“After reviewing multiple strategies and portfolio options for our Permian assets, this transaction with ConocoPhillips emerged as a very compelling value proposition,” said Wael Sawan, Shell’s upstream director in a press release.
“This decision once again reflects our focus on value over volumes as well as disciplined stewardship of capital. This transaction, made possible by the Permian team’s outstanding operational performance, provides excellent value to our shareholders through accelerating cash delivery and additional distributions.”
In its release, Shell trumpeted its Powering Progress initiative, a strategy to reach net-zero carbon emissions by reducing the use of fossil fuels. It’s one part of a broad effort by some oil and gas titans to head off environmentalists’ calls to eliminate fossil fuel use.
ConocoPhillips CEO Ryan Lance said of the acquisition, “We were presented with a unique opportunity to add premium assets at a value that meets our strict cost of supply framework and brings financial and operational metrics that are highly accretive to our multi-year plan.”
The Houston-based company made another multi-billion purchase this year, buying Concho Resources, a Permian Basin drilling company, in January for $9.7 billion.
The oil and gas industry is in the midst of a rebound from a disastrous 2020 caused by the pandemic and government shutdowns suppressing typical demand for its products.
Texas produces half of the nation’s crude oil and a quarter of its natural gas. Last April, crude oil prices plunged to record lows, reaching as low as -$40 per barrel (bbl).
Since then, oil prices have recovered past their pre-pandemic levels and now sit in the low $70 per bbl.
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Brad Johnson is an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad quoting Monty Python productions and trying to calculate the airspeed velocity of an unladen swallow.