Royal Dutch Shell wants to sell the largest oilfield assets in the United States in order to reduce emissions

64 billion yuan! Shell considers selling U.
S.
largest oilfield assets

64 billion yuan! Shell considers selling U.
S.
largest oilfield assets

The new crown pneumonia epidemic has dealt a heavy blow to the global oil industry.

At the same time, the global clean energy trend has also caused companies to seek active transformation

According to news on June 15th, according to CCTV News citing CNBC website reports, people familiar with the matter revealed that Royal Dutch Shell is considering selling its holdings in the largest oil field in the United States.

The company hopes to focus on its most profitable oil and gas assets while increasing Low-carbon investment

The sale may be part or all of Shell's business in the Permian Basin of Texas, US, worth up to 10 billion U.

S.
dollars, or about 64 billion yuan

Currently, the company is negotiating with multiple buyers
.

However, Shell declined to comment on this news

It is understood that earlier this year, Shell formulated an ambitious climate strategy plan.

The goal is to reduce carbon emissions by at least 6% by 2023 compared to 2016, by 20% by 2030, and finally achieve emissions reduction by 2050.
100%

However, a Dutch court said last month that this rate is far from enough, requiring Shell to reduce its carbon emissions by 45% by 2030 compared to 2019
.

Public information shows that Royal Dutch Shell Group is the world's largest oil company, headquartered in The Hague, the Netherlands and London, England.

It is formed by the merger of Royal Dutch Petroleum and Shell of the United Kingdom

It is a major international producer of oil, natural gas and petrochemicals, as well as a retailer of automotive fuel and lubricants
.

Its business covers 140 countries around the world, employs nearly 90,000 people, and its oil and gas output account for 3% and 3.
5% of the world's total output, respectively

Royal Dutch Shell considers selling the largest U.

S.
oil field at a valuation of more than 10 billion U.
S.
dollars

Royal Dutch Shell considers selling the largest U.
S.
oil field at a valuation of more than 10 billion U.
S.
dollars

After the Group of Seven (G7) Leaders Summit heavily supported climate financing donations, according to relevant media, the NATO Summit Communiqué will also reach an agreement on a climate action plan
.

Carbon neutrality is no longer an unfamiliar and abstract vocabulary.
It has actually exerted its effect, and the actual pressure on the enterprise field is also beginning to emerge
.
Oil giant Royal Dutch Shell (RDS.
A.
US) (Royal Dutch Shell) is considering selling the largest oil field in the United States, valued at more than 10 billion U.
S.
dollars.
CEO Ben Van Beurden also said recently that the company may need to cut oil and gas.
Business
.

Relevant media pointed out that the communiqué issued after the NATO summit will reach a consensus on a climate action plan aimed at assisting in mitigating climate change, which is regarded as a threat to NATO’s security
.
According to a copy of the final statement of the summit seen by Reuters, NATO’s goal is to strengthen awareness, adaptation, mitigation capabilities and reach on the subject of climate change
.
According to the communiqué, in response to climate change, NATO will incorporate relevant considerations at all levels of work, from formulating defense plans and capacity development to civilian preparations and exercises
.

The Dutch court ruled in May that Shell’s carbon emissions before 2030 must be reduced by 45% from 2019 levels, which is higher than the company’s original plan
.
Van Burden pointed out that the company has planned to file an appeal, but emphasized that it will still be committed to expanding the scale of carbon reduction.
The method may be to reduce its oil and gas business
.
Shell intends to reduce investment and asset sales to reduce annual oil output by 1% to 2% by 2030, and at the same time increase spending on renewable energy and low-carbon technologies to 25% of the overall budget by 2025
.

According to people familiar with the matter, Shell is reviewing its holdings in the largest oilfields in the United States to seek the possibility of a sale, as the company looks forward to focusing on its most profitable oil and gas assets and increasing investment in low-carbon fields
.
The sale may be part or all of Shell's land in Permian Basin, Texas
.
The source also pointed out that the value of the shares held may be as high as 10 billion US dollars
.

According to Shell’s website data, the company’s oil and natural gas production in Permian Basin will average 193,000 barrels of oil equivalent per day in 2020, accounting for approximately 6% of its total production that year
.
Permian Basin produces approximately 4.
5 million barrels of oil per day, which accounts for about 40% of the total U.
S.
production
.

According to independent confirmation by the report, the sale is not imminent, but negotiations with multiple potential buyers are ongoing.
Part of the entanglement is that part of the oil field's planted area is constituted by a joint venture with Occidental Petroleum
.

Shell is one of the largest oil companies in the world.
Petroleum companies are currently under pressure from investors to reduce investment in fossil fuels in order to prevent global climate change caused by carbon emissions
.
Outside of Shell, BP Plc and Total Energies have pledged to reduce carbon emissions by increasing investment in renewable energy, while also divesting some oil and gas shares
.

Looking back on earlier this year, Shell set the industry’s most ambitious climate strategy goal to reduce the carbon emissions of its commodities by at least 6% by 2023, 20% by 2030, and 45% by 2035
.
By 2050, the carbon emissions will be 100% from the 2016 level
.

The International Energy Agency (IEA) showed in a May report that if consumers want to achieve the UN’s support to limit global warming, they should immediately stop investing in new fossil fuel projects
.
Oil giants including Shell indicate that the world will need a lot of new oil and gas investment in the next few years to meet the demand for automotive fuels and chemicals
.

Enverus M&A analyst Andrew Dittmar pointed out that most Permian Basin deals this year were sold for between US$7,000 and US$12,000 per acre
.
The privately held Double Point Energy was sold to Pioneer Natural Resources for $40,000 per acre in April, the highest level since suppliers seized the Permian Basin in 2014-16
.

Several smaller shale companies, including KKR's independent energy company, have decided to merge this year
.
Due to lack of interest in oil IPOs, private equity owners hope to increase their own production while waiting for investors to be interested in new commodities
.

Last year there was a surge in mergers and acquisitions in the largest shale oil field in the United States.
Some companies tried to increase their holdings, and some companies wanted to take advantage of rising prices to sell, prompting U.
S.
oil futures to rise 49% this year to nearly $72 per barrel.
More than twice the 2020 low
.
This is due to the return of oil demand as the new crown pandemic subsides
.

what's the situation? Shell is considering selling the largest oil field in the United States, worth up to 64 billion yuan!

what's the situation? Shell is considering selling the largest oil field in the United States, worth up to 64 billion yuan!

According to the CNBC website in the United States, people familiar with the matter disclosed that Royal Dutch Shell is considering selling its holdings in the largest oil field in the United States.
Shell hopes to focus on its most profitable oil and gas assets while increasing low-carbon investments
.
The sale may be part or all of Shell's business in the Permian Basin of Texas, US, worth up to 10 billion U.
S.
dollars, or about 64 billion yuan
.

Currently, the company is negotiating with multiple buyers
.
However, Shell declined to comment on this news
.
Earlier this year, Shell formulated an ambitious climate strategy plan.
The goal is to reduce carbon emissions by at least 6% by 2023 compared to 2016, 20% by 2030, and eventually 100% reduction by 2050
.
However, a Dutch court said last month that this rate is far from enough, requiring Shell to reduce its carbon emissions by 45% by 2030 compared to 2019
.
This is the first such ruling in the world, and it has also put potential pressure on traditional oil and gas companies seeking to transform
.

Shell CEO Ben Van Beurden previously posted on social media that although he did not approve of the ruling, he would still accelerate the process of reducing emissions
.
He revealed that Shell will seek further ways to reduce emissions in a way that is both efficient and effective, which means that some bold steps will be taken in the next few years
.

In the past ten years, the Permian Basin has witnessed the rise of shale oil and gas development in the United States, and once subverted the traditional crude oil market order
.
Even in the case of uncertain long-term prospects for oil demand, the potential for future release of production capacity has made major energy giants rush, and large-scale acquisitions have emerged one after another
.
However, the new crown pneumonia epidemic has caused severe damage to the oil and gas extraction industry.
Even after the international oil price rebounded sharply from last year's low, the overall production capacity in recent months is still far from the 2018 peak
.

According to data from Shell's website, in 2020, its oil and natural gas output on the Permian drilling platform averaged 193,000 barrels per day, lower than the 250,000 barrels in 2019
.
The sale of Permian oil and gas field assets will mean further reduction of Shell's business scope in the United States, after the company has agreed to sell most of its refinery operations in the United States
.

Today, major energy companies around the world are taking action.
For example, BP is increasing investment in local offshore wind energy, while ExxonMobil and Total are focusing on carbon capture
.
Shell put forward a business transformation plan at the beginning of this year.
The company plans to gradually reduce oil production by 1 to 2 percentage points per year and expand in areas such as electricity and biofuels.
However, the ruling of the Hague court means that the Dutch energy giant must speed up Pace
.

As a countermeasure, energy companies can usually choose to sell assets, reconsider exploration expenditures, and stop LNG business expansion to achieve the goal of reducing emissions
.
JPMorgan Chase analyst Christyan Malek released a report stating that if the ruling is not overturned, Shell will be legally obliged to complete the arduous emission reduction target, which may require unprecedented drastic asset portfolio adjustments
.

Just in February of this year, Shell Chief Financial Officer Jessica Uhl said that oil and gas fields in the Permian Basin are still the core assets of the upstream business, and returning to the Permian Basin will be very attractive
.
The retreat from the Permian can be regarded as a key sign, marking the start of a major change in business strategy, and the ultimate goal is to achieve net zero carbon emissions by 2050
.

The sale of oil and gas field assets is also good for improving the condition of Shell's balance sheet
.
On the one hand, the current status of the U.
S.
shale oil industry means that even if it scales up to increase production, it is still difficult to achieve profitability in the short term; on the other hand, as a potential large-scale asset disposal option, Shell’s net debt is expected to decrease after the relevant assets are divested.
Below the US$65 billion goal, this is a key part of Shell’s energy transition strategy
.
The company's quarterly report showed that as of the end of March, the group's net debt was $71 billion
.
Since last year’s substantial dividend cut, Shell plans to increase its dividend by 4% this year, and at the same time will continue to try to reduce the level of debt burden, so as to provide shareholders with more returns
.

With the gradual recovery of oil demand due to the easing of the epidemic, as of press time, the price of Brent crude oil has exceeded US$73 per barrel, more than three times the lowest point last year
.
Goldman Sachs expects that international crude oil futures prices will continue to rise this summer, or will exceed $80 per barrel
.

Source: Mining Industry, Zhitong Finance, Fast Technology

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