Royal Dutch Shell Agrees to Sell $1 Billion of Western Canada Shale Oil, Gas Assets

By Chester Dawson

CALGARY, Alberta--Royal Dutch Shell PLC said it reached a deal to sell $1 billion of shale oil and gas assets in Western Canada as part of a global divestment program to raise cash and streamline its business operations.

Shell said Thursday it would sell developed and undeveloped acreage in the Canadian provinces of Alberta and British Columbia to Calgary-based Tourmaline Oil Corp. Those assets currently produce dry gas and natural gas liquids equivalent to 24,850 barrels a day of oil.

The deal comes as Shell seeks to divest $30 billion assets world-wide after its $50 billion acquisition of BG Group PLC in February. It represents a further retrenchment for Shell in Canada, where a year ago it shelved plans for a major new oil-sands project and took a $2 billion write-down.

"We are strengthening our shales business and creating shareholder value by selling assets that do not fit our near-term development plans," Andy Brown, the head of Shell's exploration and production business, said in a statement.

The oil-and-gas major called the approximately 206,000 net acres it is selling to Tourmaline "noncore" assets and said it retained about 430,000 net acres in Alberta's Duvernay Shale basin and some 218,000 net acres in the Montney Formation of British Columbia.

In addition to the acreage, Tourmaline will acquire three Canadian natural gas processing plants and about 450 miles of pipelines from Shell as part of the deal, which is valued at $1.04 billion, the Canadian company said.

Write to Chester Dawson at [e-mail]

(END) Dow Jones Newswires

October 21, 2016 02:12 ET (06:12 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.