Shell

Royal Dutch Shell is joining Big Oil’s exodus from Alberta, agreeing to selling most of its carbon-heavy oil sands assets in the Canadian province to Canadian Natural Resources for $8.5 billion.

As CBC reports, Alberta’s oil sands, the third-largest proven oil reserves in the world, are “among the most costly and carbon-intensive to produce from and many companies have reconsidered their exposure” as oil prices have fallen from more than $100 a barrel in 2014 to around $50 today.

Earlier this year, Norway’s Statoil closed its deal to sell all of its Canadian oil sands assets for $832 million.

Shell’s sale to Canadian Natural comes as the world’s second largest publicly-traded oil company seeks to offload $30 billion of assets to reduce debt following its acquisition of BG Group last year. It is also under investor pressure to mitigate climate change risks.

CEO Ben van Beurden said the deal allows the company to focus on assets such as deepwater oil and gas that offer higher returns on capital.

“Our people have built a really strong, competitive and environmentally responsible oil sands business over the last several decades, but oil sands mining and in situ operations are no longer a strategic fit for Shell,” Shell Canada president Michael Crothers said on a conference call.

Shell will continue to operate the Scotford Refinery and carbon capture and storage plant northeast of Edmonton. It also has a 10% stake in its original oil sands mines.

“This significant divestment should help de-gear Shell’s balance sheet over 2017 and help remove concerns around the dividend,” said Biraj Borkhataria, an analyst at RBC Capital Markets.

For Canadian Natural, the deal would boost its overall output of bitumen and conventional oil and gas to more than one million barrels per day if it closes as expected by mid-2017. “We’ll be able to acquire a world-class mine that is up and running for a 40 percent discount to what it would cost to build,” CEO Steve Laut said.

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