Canadian Natural Resources Ltd. has recently signed a deal to buy Chevron Canada Ltd.’s interests in the Athabasca Oil Sands Project and Duvernay shale for $6.5 billion US. The all-cash deal is all set to see the Calgary-headquartered CNRL. This, on the other hand, is known to be one of the largest independent oil and gas producers in the world. Plus, it is set to acquire Chevron’s 20 percent interest in the Athabasca Oil Sands Project.
Plus, it also includes a 20 percent stake in the Muskeg River and Jackpine mines in northern Alberta. Along with it, another 20 percent stake in the Scotford Upgrader northeast of Edmonton and the Quest carbon capture and storage facility, also north of Edmonton is available. As a result of the deal, CNRL consolidates its control of the Athabasca Oil Sands project. This means that it has gone into increasing its working interest from 70 percent to 90 percent. Plus, the Shell Canada owns the remaining 10 percent.
Canadian Natural Resources: What Is The Transaction All About?
The transaction adds approximately 62,500 barrels of synthetic crude oil per day to Canadian Natural Resources production. In a conference call with analysts Monday, the CNRL president Scott Stauth said the Athabasca site’s close proximity to CNRL’s Horizon oilsands mine will allow the company to find efficiencies and optimize its production in the region.
“I can see us utilizing the equipment more efficiently between the two sites,” Stauth said.
“There will be production increase opportunities in the future at (Athabasca). The assets are similar to Horizon in terms of the reserve, so you can look for that down the road.”
With the deal, U.S.-based Chevron becomes the latest foreign company to exit the Canadian oilsands. With that, others that have made similar moves in recent years include Norway’s Statoil, France’s Total SA, and Arkansas-based Murphy Oil.
Chevron spokeswoman Jennifer Werbicki confirmed in an email that the company will no longer have interests in the oilsands following the close of the transaction. She also said that Chevron will continue to have non-operated interests offshore Atlantic Canada. Plus it will retain its interests in British Columbia and Northern Canada.
Canadian Natural Resources: What More Will It Acquire?
Canadian Natural Resources will also acquire Chevron’s 70 percent operated working interest. This will be related to that of light crude oil and liquid rich assets in the Duvernay shale play in Alberta. Plus, the production from those assets is expected to average 60,000 boe/d in 2025, CNRL said.
The company is already known to be a large producer of natural gas and light crude oil. It is also known to have a vast land base across Western Canada. Stauth said there are “significant” new drilling opportunities among the Chevron assets being bought. He also added that CNRL sees the potential to grow production to 70,000 boe/d by 2027.
Canadian Natural Resources Limited has a history of expanding its asset base through acquisitions. The company has also acquired its existing stake in the Athabasca Oil Sands project from Shell Canada and Marathon Oil in 2017. Plus, in 2019, it bought the Canadian operations of U.S.-based Devon Energy for $3.8 billion. Its ability to optimize production through strategic acquisitions is one reason the has acquired the reputation of being reliable in the investment community in recent years.
Not long ago, RBC Capital Markets analyst Greg Pardy called CNRL his “favourite senior producer”. This was presented in a note to clients. Pardy said the company and other oilsands giants are benefiting from the additional export capacity of the Trans Mountain pipeline expansion. These had come online earlier this year, and have better financial resiliency than ever before.
“We remain unapologetically bullish on Canada’s oilsands majors in particular,” Pardy wrote.
CNRL’s deal with Chevron has an effective date of Sept. 1, 2024. It is expected to close during the fourth quarter of 2024.
What More Did Canadian Natural Resources Say?
Canadian Natural Resources said on Monday that it it will increase its quarterly dividend to shareholders. This will be done by a mere seven percent figure to 56.25 cents per share. This will be starting off effectively with its next regular payment in January 2025. Along with this, both Chevron and CNRL’s stock prices were trending higher on Monday. The Canadian Natural Resources Limited shares were up to 3.89 percent of as of midday. On the other hand, the shares of Chevron were up to 0.58 percent.