(Calgary) Canadian Natural Resources (CNRL) has signed an agreement to purchase Chevron Canada’s interests in the Athabasca oil sands project and Duvernay shale for US6.5 billion.
The all-cash deal will see Calgary-based CNRL, one of the world’s largest independent oil and gas producers, acquire Chevron’s 20% stake in the Chevron oil sands project. ‘Athabasca.
This includes a 20% interest in the Muskeg River and Jackpine mines in northern Alberta, as well as a 20% interest in the Scotford upgrader northeast of Edmonton and the Quest carbon capture and storage facility, also north of Edmonton.
Following this agreement, CNRL consolidates its control of the Athabasca oil sands project, increasing its stake from 70% to 90%. Shell Canada holds the remaining 10%.
The transaction adds approximately 62,500 barrels per day of synthetic crude oil to CNRL’s production. In a conference call with analysts Monday, CNRL President Scott Stauth said the Athabasca site’s proximity to CNRL’s Horizon oilsands mine will allow the company to find efficiencies and optimize its production in the region.
“I can see us using the equipment more efficiently between the two sites,” Stauth said. There will be opportunities to increase production in the future [à Athabasca]. The assets are similar to Horizon in terms of deposit, so you can expect that in the future. »
Foreign withdrawal from Canadian tar sands
With this agreement, Chevron, based in the United States, becomes the latest foreign company to withdraw from the Canadian oil sands. Other companies that have made similar moves in recent years include Statoil of Norway, Total of France and Murphy Oil of Arkansas.
Chevron spokeswoman Jennifer Werbicki confirmed in an email that the company will no longer have any interests in the oil sands after the transaction closes.
She said Chevron will continue to have undeveloped interests offshore Atlantic Canada and will retain interests in British Columbia and northern Canada.
Canadian Natural will also acquire Chevron’s 70% interest in the light crude oil and liquids-rich assets of the Duvernay shale play in Alberta. Production from these assets should reach an average of 60,000 “oil equivalent” barrels per day (boe/d) in 2025, CNRL said.
The company is already a major producer of natural gas and light crude oil, with a large territory in Western Canada. Mr. Stauth said there are “significant” new drilling opportunities in the Chevron assets being purchased, and added that CNRL sees the potential to increase production to 70,000 boe/d by 2027.
CNRL has a history of expanding its asset base through acquisitions. The company acquired its existing stake in the Athabasca Oil Sands project from Shell Canada and Marathon Oil in 2017, and in 2019 it purchased the Canadian operations of U.S.-based Devon Energy for $3.8 billion.
Its ability to optimize production through strategic acquisitions is one of the reasons why CNRL has become the darling of the investment community in recent years.
RBC Capital Markets analyst Greg Pardy has previously indicated that CNRL and other oilsands giants benefit from additional export capacity from the Trans Mountain pipeline expansion, which came online earlier this year , and had better financial resilience than ever before.
“We remain steadfastly bullish on large Canadian oil sands companies in particular,” Mr. Pardy wrote in a note to clients.
The all-cash deal has an entry date of 1er September 2024 and is expected to close during the fourth quarter of 2024, subject to regulatory approvals and other customary closing conditions.
Additionally, Canadian Natural announced that it would increase its quarterly dividend to shareholders by 7%, to 56.25 cents per share, beginning with its next regular payment in January 2025.