Chevron Sells Canadian Oil Sands and Shale Assets to Canadian Natural Resources for $6.5 Billion

Chevron Corporation has announced the sale of its assets in Canada’s Athabasca oil sands and Duvernay shale formation to Canadian Natural Resources Limited for $6.5 billion. The transaction, disclosed on Monday, is part of Chevron’s broader strategy to raise $10 to $15 billion by 2028 through asset sales, as it shifts its focus towards regions such as U.S. shale and Kazakhstan.

The all-cash deal is anticipated to conclude by December 6, 2024, enhancing Chevron’s financial position as it navigates a competitive landscape alongside ExxonMobil‘s $53-billion bid for Hess Corporation. “This deal offloads a high-cost asset in the oil sands from Chevron,” said Allen Good, an analyst at Morningstar. “Oil majors have been moving away from the oil sands in recent years.”

The Canadian energy sector has seen significant international exits, with Norway’s Statoil, France’s Total SA, and Murphy Oil among previous departures. In a statement, Chevron spokeswoman Jennifer Werbicki confirmed the company’s exit from the oilsands but noted the company would maintain non-operated interests offshore in Atlantic Canada and retain interests in British Columbia and Northern Canada.

Following the acquisition, Canadian Natural Resources Limited (CNRL) will own 90% of the Athabasca oil sands project, consolidating its control and adding approximately 62,500 barrels of synthetic crude oil per day to its production capacity. CNRL also acquires Chevron’s 70% stake in the Duvernay shale, with expected production reaching 60,000 barrels of oil equivalent per day (boepd) by 2025.

“There will be production increase opportunities in the future,” said Scott Stauth, President of CNRL, during a conference call. “The assets are similar to Horizon in terms of the reserve, so you can look for that down the road.” CEO Mark Stainthorpe announced that CNRL would increase its quarterly dividend by 7% starting in January 2025, reflecting the deal’s immediate addition to cash flow and earnings.

CNRL has a history of expanding its asset base through strategic acquisitions, previously acquiring Athabasca stakes from Shell Canada and Marathon Oil in 2017, and purchasing Devon Energy‘s Canadian operations in 2019. Notably, CNRL is benefiting from the additional export capacity offered by the Trans Mountain pipeline expansion.

The acquisition is effective as of September 1, 2024, and CNRL stocks saw an increase of 3.89% as of midday trading on the announcement day, while Chevron’s shares rose by 0.58%.