Shell Enterprises, a subsidiary of energy giant Royal Dutch Shell, is set to sell off its Texas-based Permian business to ConocoPhillips for some $9.5bn in cash.
The deal, however, which transfers all of Shell’s interest in the Permian to oil and gas heavyweight ConocoPhillips, is still subject to regulatory approvals.
“After reviewing multiple strategies and portfolio options for our Permian assets, this transaction with ConocoPhillips emerged as a very compelling value proposition,” Shell’s upstream director Wael Sawan said in a statement.
Sawan added that the decision reflects the business’ “focus on value over volumes” and “provides excellent value to our shareholders through accelerating cash delivery and additional distributions.”
Around $7bn of the funds raised from the acquisition will be dished out to shareholders, while the remainder is set to strengthen Shell’s balance sheet.
The shareholder payday comes on top of the energy giant’s distributions in the range of 20 to 30 per cent of its operational cash flow.
The buyout, expected to close in the final quarter of this year, will see around 225k acres transferred to ConocoPhillips, bolstering the firm’s output capacity by an additional 175,000 barrels a day.
Morgan Stanley and Tudor, Pickering, Holt & Co have been called in to serve as Shell’s financial advisors, while Norton Rose Fulbright serves as the energy giant’s legal advisor for the divestment.