HOUSTON (NYTIMES) - Royal Dutch Shell on Monday sold its oil and gas production in the Permian Basin, the biggest American oil field, to ConocoPhillips for US$9.5 billion (S$12.8 billion) in cash.
The deal marks a turning point for Shell, which had put considerable effort into developing the field since buying acreage from Chesapeake Energy nine years ago, expanding its production to about 200,000 barrels a day.
The sale is the latest sign that Shell, like other European oil companies, is under pressure to sell off oil and gas production and move towards producing cleaner energy in response to growing concerns about climate change among investors and the general public.
A wave of acquisitions in the Permian began in the wake of the coronavirus pandemic last year as companies sought to cut costs. The scale of the Shell deal is similar to Conoco's acquisition of Concho Resources for US$9.7 billion in October last year, a deal that made Conoco a major player in the Permian, which straddles Texas and New Mexico. In April, Pioneer Natural Resources bought DoublePoint Energy for US$6.4 billion.
With the acquisition of Shell's acreage, Conoco consolidates its position as a top-tier Permian producer along with Pioneer, Occidental Petroleum, Exxon Mobil and Chevron.
Shell's sale of its West Texas Permian holdings, which provided an estimated 6 per cent of the company's global oil and gas production last year, had been expected for months. Shell recently sold its stakes in offshore oil and gas fields in Malaysia and the Philippines.
Shell has been talking about cutting emissions since 2017, and it has accelerated its shift to cleaner fuels over the past two years, though not enough to satisfy many environmentalists. In addition to a goal of net-zero emissions by 2050, it has set a target of reducing oil output up to 2 per cent a year by 2030 through divestments and lower investments in exploration and production.
Shell plans to increase its investments in renewables and low-carbon technologies to roughly 25 per cent of its budget by 2025.
This week, Shell announced plans to build a biofuels facility in the Netherlands, which will be used to make cleaner aviation fuel and renewable diesel.