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  • Shell sells its Permian Basin assets ConocoPhillips in a US$9.5 billion (A$13 billion) cash deal as it continues to shift its focus to clean energy
  • Following the sale, Shell will produce oil and gas almost entirely offshore from the Gulf of Mexico
  • The company is divesting to Conoco roughly 225,000 net acres (91,054 hectares) of land that currently produces some 175,000 barrels of oil per day
  • Shell plans to distribute US$7 billion (A$9.6 billion) of the total sale value to shareholders as dividends on top of its existing commitments
  • The Permian Basin stretches across Texas and New Mexico, and accounts for around 40 per cent of all US oil production

Oil and gas giant Shell is selling its Permian Basin assets ConocoPhillips in a US$9.5 billion (A$13 billion) cash deal as it continues to shift its focus to clean energy.

The sale will see Shell handball to Conoco roughly 225,000 net acres (91,054 hectares) of land that currently produces some 175,000 barrels of oil per day. This leaves Shell’s oil and gas production almost entirely in the offshore Gulf of Mexico.

Wael Sawan, director of Shell’s Upstream business, said the Conoco deal emerged as a “very compelling” proposition on the back of a review of multiple strategies and portfolio options for Shell’s Permian Basin assets.

“This decision once again reflects our focus on value over volumes as well as disciplined stewardship of capital,” Mr Sawan said.

“This transaction, made possible by the Permian team’s outstanding operational performance, provides excellent value to our shareholders through accelerating cash delivery and additional distributions.”

All up, US$7 billion (A$9.6 billion) — almost three-quarters of Shell’s US$9.5 billion cash influx — will be returned to shareholders as dividends. This is on top of Shell’s existing distribution commitments.

Shell said the rest of the cash would be used to bolster its balance sheet.

Shell and other European oil and gas producers such as BP have committed to slowly move away from crude oil production and up their investment into renewable energy sources such as wind and solar.

Shell said that since 2017 its Permian Basin operations had reduced greenhouse gas and methane intensity by 80 per cent through investment in infrastructure and technology.

Shell put its Permian assets up for sale back in June. The Permian Basin stretches across Texas and New Mexico, and accounts for around 40 per cent of all US oil production.

The sale to Conoco was announced the same day Shell released a damage report for its West Delta-143 offshore facilities from Hurricane Ida.

Shell said thanks to some “significant structural damage” from the severe storm, some key platform facilities would be offline for repairs until the end of 2021.

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