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Shell (RDS.A) Divests Kaybob Duvernay Assets to Crescent Point

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Royal Dutch Shell Plc RDS.A and Crescent Point Energy Corp. CPG recently closed the accretive transaction wherein the latter acquired the Kaybob Duvernay assets of the former in Northern Alberta for C$900 million.

In February 2021, Shell through its fully-owned subsidiary Shell Canada Energy reached an agreement with the Canada-based upstream company Crescent Point to sell its shale operations in Western Canada to further downsize its exposure to the Alberta oilpatch.

Shell has been divesting most of its oilsand assets in Canada as the country struggled with transport-related restrictions for several years and most companies diverted their interest to valuable assets in other locations. In 2017, this integrated major divested a number of its oil sand leases in Alberta to Canadian Natural Resources Ltd CNQ as part of its strategic revamp to focus solely on businesses with sustainable advantages.

The Duvernay shale assets, which include around 450,000 net acres in the Fox Creek and Rocky Mountain areas, generate a total output of nearly 30,000 barrels of oil equivalent per day from more than 270 wells. Per Crescent Point, it spotted in excess of 200 other viable drilling hubs in the acquired assets, a large portion of which remains unexplored. The company is expected to withhold employees operating on the field and several technical activities that favor the development of the assets.

The divestiture will enable Shell to deeply concentrate on core productive resources, such as the Permian Basin in Texas and New Mexico. Notably, the divestment of the assets bolsters Shell's attempt to focus on the upstream portfolio to generate cash flow.

Company Profile

Shell is one of the primary oil majors — a group of U.S. and Europe-based big energy multinationals — with global operations. The company is fully-integrated as it participates in every aspect energy-related aspect from oil production to refining and marketing.

Zacks Rank & Another Key Pick

Shell currently sports a Zacks Rank #1 (Strong Buy). Another top-ranked stock in the energy space is Matador Resources Company MTDR, presently flaunting a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

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Canadian Natural Resources Limited (CNQ) : Free Stock Analysis Report
Crescent Point Energy Corporation (CPG) : Free Stock Analysis Report
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