The transformation of oil giants! Shell sells shale oil assets for $9.5 billion

To accelerate the energy transition, the oil giant Shell has taken another important step.

According to the Wall Street Journal, Shell has agreed to sell all its assets in the Permian Basin, the largest oil field in the United States, to ConocoPhillips for approximately US$9.5 billion.

This marks Shell’s acceleration from its traditional oil and gas business to low-carbon assets.

The daily output is about 175,000 barrels of oil equivalent, which accounted for about 6% of its total global oil and gas production last year.

ConocoPhillips said in a statement that it expects to produce approximately 200,000 barrels of oil equivalent per day from these assets next year.

After the oil price plummeted, the shale oil industry ushered in a wave of bankruptcy mergers and acquisitions. ConocoPhillips announced in October last year an all-stock transaction for US$9.7 billion to acquire rival Concho Resources, making it one of the top shale oil producers in the Permian Basin. With rising oil prices, shale oil and gas production in the region is recovering.

As one of the world’s largest oil companies, Shell is accelerating its transformation and business adjustment. Its total oil production is decreasing by 1%-2% per year. Correspondingly, electricity, hydrogen energy, biofuels, etc. are becoming new growth. business.

In September last year, Reuters reported that Shell is conducting a company-wide cost reduction assessment that may reduce oil and gas production costs by as much as 40%, thereby saving cash and devoting more energy to renewable energy and electricity. 

However, in the process of realizing the energy transition, traditional upstream businesses will continue to provide important energy supplies, provide the required cash flow, and accelerate investment in future growth businesses. In terms of net profit, Shell has performed very well, achieving a net profit of US$9.088 billion in the first half of 2021.

According to the transformation strategy announced by Shell, Shell plans to become a very large-scale low-carbon company by the early 2030s, and achieve its goal of becoming a net-zero-emission energy company by 2050.

In the short term, Shell’s strategy will rebalance its business portfolio and invest US$5-6 billion in future growth businesses each year (including US$3 billion in marketing and US$2-3 billion in renewable energy and energy solutions). Invest 8-9 billion U.S. dollars in the transformation support business (including about 4 billion U.S. dollars for natural gas integration; 4-5 billion U.S. dollars for chemical and chemical products business), and about 8 billion U.S. dollars in traditional upstream business.

By streamlining traditional oil and gas assets, giants such as Shell are reshaping the traditional business structure and accelerating the transition to a comprehensive energy company.