Canadian oil firm to spend $9.4 billion to buy Alberta fields

Bloomberg

The future of the Canadian oil sands is looking a lot more Canadian. Calgary-based Canadian Natural Resources Ltd. said it will spend C$12.7 billion ($9.4 billion), its biggest purchase ever, to buy Alberta oil fields and facilities that process the sticky bitumen from oil sands from Royal Dutch Shell Plc and Marathon Oil Corp.
“At the time you see some of the majors pivoting to other assets, you see Canadian companies that are doubling down on the oil sands,” Kevin Birn, a director at IHS Energy in Calgary, said by phone Thursday.
The deals come as West Texas Intermediate, the benchmark US crude, falls below $50 a barrel. It’s also less than a month after two major US producers had to remove billions of barrels of Canadian oil from their stated reserves because they had become uneconomical as prices fell. As some producers shift capital away from Northern Alberta toward lower-cost, quicker-return resources such as US shale, Canadian companies without the same global reach are staying put and filling the void.
“This transformational acquisition strengthens our robustness and sustainability,” Steve Laut, president of Canadian Natural, said in a conference call. “By any measure, these are world-class assets.” Canadian Natural shares rose as much as 8.8 percent and were 6.6 percent higher at C$42.05 at 11:26 a.m. Toronto time.
Shell’s sale came as the Anglo-Dutch producer seeks to divest $30 billion of assets to cut its debt, which surged after the acquisition of BG Group Plc last year. It helps the company in its strategy to pivot toward gas production from oil, boosting reserves of the cleaner-burning fuel to 60 percent from half.
Shell is getting rid of almost all its production assets in the oil sands, while holding onto the Scotford upgrader, which converts heavy oil to lighter synthetic crude.
Marathon agreed to buy 70,000 acres in the Permian basin, a shale play in Texas, for $1.1 billion cash at the same time it exited the oil sands. The company said Thursday that Canadian oil sands accounted for about a third of its expenses and only 12 percent of production.