Chevron Sells Canadian Oil Sands and Shale Assets to Canadian Natural Resources

Chevron Corporation announced the sale of its assets in the Athabasca oil sands and Duvernay shale formation to Canadian Natural Resources Limited (CNRL) for a total of $6.5 billion. The all-cash deal forms part of Chevron’s broader divestiture strategy aimed at raising between $10 billion to $15 billion by 2028 through asset sales. This move allows Chevron to enhance its focus on more lucrative regions such as U.S. shale and Kazakhstan.

The sale, expected to be finalized by December 6, comes as Chevron seeks to increase its financial leverage amidst its strategic battle with Exxon for a $53-billion bid over Hess. A pending decision by a three-judge arbitration panel is set for deliberation in May regarding Exxon’s right to first refusal.

The assets being acquired by Canadian Natural include a 20% stake in the Athabasca Oil Sands Project, including interests in the Muskeg River and Jackpine mines, as well as the Scotford Upgrader and the Quest carbon capture and storage facility. This acquisition increases Canadian Natural’s ownership of the Athabasca Oil Sands from 70% to 90%, with the remainder held by Shell Canada.

Allen Good, a Morningstar analyst, commented on the divestiture, stating: “(The deal) offloads a high-cost asset in the oil sands from Chevron and the Duvernay asset, which seems not to be competitive with the Permian position.” He further noted a trend among oil majors moving away from the oil sands to potentially lower-cost and higher-return ventures.

Canadian Natural anticipates boosting its production by 122,500 barrels of oil equivalent per day (boe/d) with the integration of these new assets by 2025, requiring a further $400 million in investment next year. Following the transaction, the company announced an increase in its quarterly dividend by 7% to 56.25 Canadian cents per share, payable from January 2025.

Shares in Canadian Natural rose nearly 3.7% while Chevron’s stocks increased by 0.7% in afternoon trading.