ConocoPhillips Completes $9.5B Shell Deal

ConocoPhillips Completes $9.5B Shell Deal
The assets include around 225,000 net acres and producing properties located entirely in Texas.

ConocoPhillips (NYSE: COP) has announced that it has completed its acquisition of Shell Enterprises LLC’s Delaware basin position for $9.5 billion in cash.

After customary closing adjustments, cash paid for the acquisition was approximately $8.6 billion, according to ConocoPhillips. The assets include around 225,000 net acres and producing properties located entirely in Texas, as well as over 600 miles of operated crude, gas and water pipelines and infrastructure, the company highlighted.

“This deal was justified on three key merits: it meets our rigorous cost of supply framework, we see a way to drive efficiencies from the assets, and the transaction makes our 10-year plan better,” Ryan Lance, the chairman and chief executive officer of ConocoPhillips, said in a company statement.

“We believe the addition of these high-quality assets improves our underlying business drivers, expands our cash from operations, enhances our ability to deliver higher returns on and of capital, and lowers our average GHG intensity,” he added.

“The completion of this acquisition caps off an exceptional year and significantly strengthens our company as we head into 2022. We welcome a new group of employees and look forward to integrating these properties into our Permian business and realizing the full potential of this transaction,” Lance went on to say.

ConocoPhillips announced the acquisition of Shell Enterprises LLC’s Delaware basin position back in September. In a company statement at the time, ConocoPhillips noted that the transaction significantly enhances its 10-year plan, which was based on an oil price of $50 per barrel WTI. Based on the same oil price assumption, the company said the acquisition is highly accretive on earnings, operating cash flow, free cash flow, return on capital employed and returns of capital to shareholders versus the prior plan.

In January this year, ConocoPhillips revealed that it had completed its acquisition of Concho Resources, following shareholder approval by both companies. When the deal was first announced in October 2020, ConocoPhillips outlined that the transaction created a company with an approximately $60 billion enterprise value.

In August last year, ConocoPhillips completed a previously announced transaction to acquire additional Montney acreage in Canada from Kelt Exploration Ltd. Cash consideration for the deal was approximately $390 million.

To contact the author, email andreas.exarheas@rigzone.com


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