Shell to Sell Canadian Oil-Sands Business for $7.25B

Industries Dow Jones Newswires

An old Shell logo is seen on a vintage fuel wagon (Copyright Reuters 2016)

Royal Dutch Shell is selling its oil sands interests in Canada in a two-part deal worth $7.25 billion, as part of the oil major's plan to reshape the business. 

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In the first part of the deal, Shell will sell its 60% interest in the Athabasca oil sands project, its 100% interest in the Peace River complex in situ assets and a number of undeveloped oil sands leases in Alberta, Canada, to a subsidiary of Canadian Natural Resources Ltd. for $8.5 billion in shares and cash. 

Secondly, Shell and Canadian Natural will jointly buy and equally-own Marathon Oil Canada Corporation--which holds a 20% interest in the Athabasca oil sands project--from Marathon Oil Corp. for $1.25 billion each in cash. 

Shell's chief executive, Ben van Beurden, said: "We are strengthening Shell's world-class investment case by focusing on free cash flow and higher returns on capital, and prioritizing businesses where we have global scale and a competitive advantage such as integrated gas and deep water. 

"The proceeds will accelerate free cash flow and reduce gearing and make a meaningful contribution to Shell's $30 billion divestment program," he added. 

Marathon Oil also said Thursday that it would buy about 70,000 net surface acres in the U.S.'s Permian Basin from BC Operating Inc. and other entities for $1.1 billion in cash. 

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Marathon Oil said the Canadian oil sands deal is expected to close in mid-2017, while the Permian Basin deal will close in the second quarter of 2017. 

Write to Ian Walker at ian.walker@wsj.com