Shell Plans To Sell U.S. Oil Assets For $10 Billion

Oil giant Royal Dutch Shell is planning to sell its holdings in the largest oil field in the United States for as much as $10 billion U.S.

The potential sale comes as Shell looks to focus on its most profitable oil-and-gas assets and grow its low-carbon investments. The sale could be for part or all of Shell’s 260,000 acres in the Permian Basin, located in Texas. The holdings could be worth as much as $10 billion U.S.

Shell is one of the world’s largest oil companies and is under pressure from investors to reduce its fossil-fuel investments and carbon emissions.

Mergers and acquisitions activity in the top U.S. shale field jumped in the last year. U.S. oil futures are up 49% this year to nearly $72 U.S. per barrel, more than double their 2020 low as oil demand returned as the Covid-19 pandemic recedes.

Earlier this year, Shell set out one of the sector’s most ambitious climate strategies, with a target to cut the carbon intensity of its products by at least 6% by 2023, 20% by 2030, 45% by 2035, and by 100% by 2050 from 2016 levels. However, a Dutch court said last month that Shell’s efforts are not enough, ordering it to lower emissions by 45% by 2030 from 2019 levels.

Shell’s oil and gas production in the Permian Basin averaged 193,000 barrels of oil equivalent per day in 2020, around 6% of its total output that year. The Permian Basin produces roughly 4.5 million barrels of oil a day, or about 40% of overall U.S. production.

More deal-making could take place this year, according to industry experts. Last week, Occidental Petroleum agreed to sell some of its Permian Basin holdings to Colgate Energy for $508 million U.S. in a move to reduce its debt.