Shell sells non-core Canadian oil and gas assets for $1 billion

Thu Oct 20, 2016 7:39pm EDT
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By Nia Williams

CALGARY, Alberta (Reuters) - Royal Dutch Shell Plc (RDSa.L: Quote) said on Thursday it is selling $1.03 billion worth of non-core oil and gas properties in western Canada to Tourmaline Oil Corp (TOU.TO: Quote), the latest example of the global oil major trimming its operations in the region.

Shell said it will sell 206,000 acres (83,365 hectares) of developed and undeveloped lands, amounting to production of about 24,850 barrels of oil equivalent per day, to Calgary-based Tourmaline.

The assets include 61,000 acres (24,685 hectares) in the Gundy area in northeast British Columbia and 145,000 acres (58,679 hectares) in the Deep Basin area of west-central Alberta.

Shell is undergoing a $30 billion asset divestment program globally and has already pulled back from some capital commitments in western Canada.

In July, the company delayed a decision on whether to build a liquefied natural gas export terminal in British Columbia, citing global industry challenges.

In October 2015, it halted its Carmon Creek oil sands project in northern Alberta because of the lack of infrastructure to move Canadian crude to market.

Shell Upstream Director Andy Brown said the company was selling to Tourmaline because the assets did not fit into Shell's near-term development plans.

Robert Fitzmartyn, director of institutional research at GMP FirstEnergy in Calgary, said the divestitures and delays were not a good sign.   Continued...

A logo of Shell is pictured at a gas station in the western Canakkale province, Turkey April 25, 2016. REUTERS/Murad Sezer