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ConocoPhillips completes $9.5B acquisition of Shell’s Permian assets

ConocoPhillips completes $9.5B acquisition of Shell’s Permian assets


ConocoPhillips this week completed its acquisition of Shell Enterprises LLC’s Delaware Basin holdings for $9.5 billion in cash, which had been announced in September.

The assets purchased include 225,000 net acres and producing properties in West Texas as well as more than 600 miles of operated crude, gas and water pipelines and infrastructure. Existing production is around 175,000 barrels of oil equivalent per day, and ConocoPhillips estimated that would be 200,000 BOED in 2022, roughly half of which will be operated.

The majority of Shell’s Midland-based Permian employees and many Houston-based employees were offered jobs by ConocoPhillips, effective with the closing of the deal.

“This deal was justified on three key merits: it meets our rigorous cost of supply framework, we see a way to drive efficiencies from the assets, and the transaction makes our 10-year plan better,” said Ryan Lance, chairman and chief executive officer of ConocoPhillips in a statement. “We believe the addition of these high-quality assets improves our underlying business drivers, expands our cash from operations, enhances our ability to deliver higher returns on and of capital, and lowers our average GHG intensity.”

For its part, Shell commented that the deal “reflects Shell's focus on value over volumes as well as disciplined stewardship of capital. This transaction was made possible by the Permian team’s outstanding operational performance and provides excellent value to our shareholders through accelerated cash delivery and additional distributions.”

As previously announced, Shell said the cash proceeds from this transaction will be used to fund $7 billion in additional shareholder distributions with the remainder used for further strengthening of the balance sheet. The first tranche of additional shareholder distributions will be in the form of share buybacks of up to $1.5 billion and commenced on Dec. 2.

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Published: 04-12-2021

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