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Shell completes sale of Canadian shale, Australian aviation assets

Royal Dutch Shell plc yesterday said it has completed divesting all of its oil sands interests in Canada and has reduced its share in the Athabasca Oil Sands Project (AOSP) from 60% to 10%.

Under the first agreement, Shell completed the sale to a subsidiary of Canadian Natural Resources Limited its entire 60% interest in AOSP, its 100% interest in the Peace River Complex in-situ assets, including Carmon Creek, and a number of undeveloped oil sands leases in Alberta, Canada. The consideration to Shell from Canadian Natural is approximately USD8.2 billion, comprised of USD5.3 billion in cash plus around 98 million Canadian Natural shares currently valued at USD2.9 billion. Shell’s share position in Canadian Natural will be managed for value realisation over time.

Under a separate agreement, Shell and Canadian Natural have completed the joint acquisition and now equally own Marathon Oil Canada Corporation (MOCC), which holds a 20% interest in AOSP, from an affiliate of Marathon Oil Corporation for USD1.25 billion each.

As previously announced, the transactions were estimated to result in a post-tax impairment of USD1.3 to USD1.5 billion, of which USD1.1 billion was taken in the first quarter of 2017, with a further USD0.4 billion expected in the second quarter, based on final closing adjustments.

Effective June 1, 2017, Canadian Natural will operate the AOSP upstream mining assets, while Shell will continue as operator of the Scotford upgrader and Quest carbon capture and storage (CCS) project, located next to the 100% Shell affiliate-owned Scotford refinery and chemicals plants.

Shell retains significant operations in Canada that are not affected by these transactions, including, in upstream shales, with large acreage positions in the Duvernay and Montney formations; downstream through chemicals, refining and marketing; and in integrated gas with the proposed LNG Canada project.

Meanwhile, down under, Shell also announced the completion of the sale of its Australian aviation business (Shell Aviation Australia Pty Ltd) to Viva Energy Australia Pty Ltd for a total transaction value of approximately USD 250 million, including working capital, following regulatory approval. This sale was announced on 19 December 2016.

Viva Energy is the exclusive licensee of all Shell-branded fuels and lubricants in Australia. The Shell brand remains visible across the aviation refueling network in Australia and Viva Energy will continue to supply to aviation customers as per existing agreements.

Shell’s upstream operations in Australia, which include exploration, production and gas commercialisation, are not impacted by this announcement.