The sale could include some or all of Shell’s approximately 260,000 acres (105,200 hectares) in the Permian Basin, located primarily in Texas. The holdings could be worth as much as $ 10 billion, the sources said, on condition of anonymity, as the talks are private.
Shell declined to comment.
Shell is one of the largest oil companies in the world, all of which have come under pressure from investors to cut back on investments in fossil fuels in order to stem the changes in the global climate caused by carbon emissions. Shell, BP Plc and TotalEnergies have pledged to reduce their emissions by investing more in renewable energies while divesting certain stakes in oil and gas.
Mergers and acquisitions in America’s main shale deposit have surged in the past year, with some companies looking to strengthen their holdings and others looking to take advantage of rising prices to sell. U.S. oil futures are up 49% this year to nearly $ 72 a barrel, more than double their 2020 low as demand for oil has returned with the pandemic ebbing.
Earlier this year, Shell set out one of the most ambitious climate strategies in the industry, with the goal of reducing the carbon intensity of its products by at least 6% by 2023, 20% by 2030, 45% by 2035 and 100% by 2050 from 2016 levels. However, a Dutch court said last month that Shell’s efforts were not enough, ordering it to cut its emissions by 45% of by 2030 compared to 2019 levels.
Last month, the International Energy Agency (IEA) said in a report that investment in new fossil fuel projects would have to stop immediately if consumers were to meet UN-backed targets to limit global warming. climate.
Oil majors, including Shell, say the world will need substantial new investment in oil and gas for a few years to meet demand for fuels and chemicals.
Shell’s oil and gas production in the Permian from platforms operated and not operated by the company averaged 193,000 barrels of oil equivalent per day in 2020, or about 6% of its total production that year, according to its website.
The Permian produces about 4.5 million barrels of oil per day, or about 40% of overall United States production.
More deals could take place this year, with Chevron, Exxon Mobil and others looking to get rid of unwanted assets and raise funds, industry experts say. Last week, Occidental Petroleum agreed to sell part of its Permian stake to Colgate Energy for $ 508 million in order to reduce its debt.
Most Permian deals this year have been for between $ 7,000 and $ 12,000 an acre, said Andrew Dittmar, mergers and acquisitions analyst at energy researcher Enverus.
The increase in activity pushed up prices. In April, DoublePoint Energy was sold to Pioneer Natural Resources for about $ 40,000 an acre, a level not seen since producers’ rush from 2014 to 2016 to take positions in the Permian.
Several smaller shale companies, including Independence Energy, owned by KKR, have combined this year. Lack of interest in oil IPOs have private equity owners aiming to increase production while waiting for investor interest in new offerings.