- Sep 21, 2021 6:28 pm GMT
Anglo-Dutch oil supermajor Shell is set to leave the Permian with a divestment worth close to $10 billion. The company said it will sell its assets in the shale play to ConocoPhillips for a total price of $9.5 billion.
WHY IT HAS HAPPENED
- The decision to exit the Permian has a lot to do with a Dutch court ruling from earlier this year that ordered Shell to reduce its carbon footprint considerably.
- It reflects Shells focus on "value" over "volumes" as well as disciplined stewardship of capital. According to Shell "a very compelling value proposition."
- Divestments immediately emerged as the most realistic way for Shell to comply with the court order,
WHAT ARE THE IMPLICATIONS?
- The deal won't reduce emissions, as someone else (ConocoPhillips) will be operation the field.
- This will make COP one of the largest player in permian.
- Shell intends to use the proceeds for returning it to shareholder and repairng balance sheet.
Despite the increasing pressure on oil & gas industry to reduce emissions and subsequent divestment of emission intensive assets, fewer companies are putting money back in renewables, biofuels, CCS; the stated pathways to decarbonize.
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