This is Shell’s eighth consecutive report on performance in our oil sands operations.
The annual update shares details on our efforts and progress in developing Alberta’s oil sands in an economically, socially and environmentally responsible way. This report is intended for those who have interest in our performance and a desire to better understand oil sands development.
In March 2017, Shell group agreed to sell to Canadian Natural Resources Limited (Canadian Natural) its 60% interest in the Athabasca Oil Sands Project (AOSP), accounted for as a joint operation, its 100% interest in the Peace River Complex in-situ assets including Carmon Creek, and a number of undeveloped oil sands leases, all in Alberta, Canada. The consideration is approximately $8.5 billion USD, comprising $5.4 billion USD in cash and around 98 million Canadian Natural shares valued at $3.1 billion USD as at 9 March 2017.
The transaction is estimated to result in a post-tax impairment loss of $1.3 billion USD to $1.5 billion USD, subject to adjustments. In a related transaction, Shell group and Canadian Natural have agreed to jointly (50:50) acquire Marathon Oil Canada Corporation (MOCC), which has a 20% interest in the AOSP, for $1.25 billion USD each. Following these transactions, Shell Canada Energy will continue as operator of the Scotford Upgrader and the Quest carbon capture and storage (CCS) project. Subject to regulatory approvals, the transactions are expected to close in mid 2017.
Subject to closing of these transactions and additional further conditions, Shell group may swap its purchased interest in MOCC for a 20% interest in the Scotford Upgrader and Quest CCS project. If the swap were to occur, Shell group would fully exit AOSP mining operations and have a 20% interest in the Scotford Upgrader and Quest CCS project.