Chevron Sells $6.5 Billion Oil Sands and Shale Stakes to Canadian Natural Resources in Strategic Shift

October 7, 2024

2 minutes read

Chevron Corp. has agreed to sell its stakes in oil sands and shale assets in Western Canada to Canadian Natural Resources Ltd. for $6.5 billion.

The deal involves Chevron’s 20% interest in the Athabasca Oil Sands Project and a 70% stake in the Duvernay shale, both located in Alberta. According to a company statement released on Monday, the all-cash transaction has an effective date of Sept. 1 and is expected to close in the fourth quarter, pending regulatory approvals.

This sale aligns with Chevron’s strategy to shift its focus toward other growth areas, particularly the Permian Basin in the U.S. and the Tengiz field in Kazakhstan, where a $48.5 billion expansion project is nearing completion.

In addition to the asset sale, Chevron is also in the process of acquiring Hess Corp. for $53 billion, a move that would give it access to a significant offshore oil field in Guyana, a major emerging exploration hub.

Chevron shares rose by as much as 1.3% ahead of regular trading in New York following the announcement. The transaction makes Chevron the latest major oil producer to divest from Canada’s oil sands, following the exits of BP Plc, Shell Plc, ConocoPhillips, Equinor ASA, and Devon Energy Corp. These companies have sold their Canadian holdings to local firms, consolidating control of the oil sands with Canadian producers like Canadian Natural Resources, Cenovus, and Suncor Energy Inc.

Canada’s oil sands have been a significant energy source for decades, but the industry is undergoing a transformation. The recent completion of the Trans Mountain pipeline expansion has opened up new export opportunities to Asian markets, reducing dependence on U.S. pipelines and refineries. From June to mid-September, 28 million barrels of crude were shipped to Canada’s west coast, with nearly two-thirds going to China, India, South Korea, and Brunei.

The Duvernay shale formation, located in southwest Alberta, is a key source of condensate, light oil, and natural gas. Chevron has been a leading operator in the region. Canadian Natural Resources expects production from the acquired assets to average around 60,000 barrels of oil equivalent per day in 2025, with output including 179 million cubic feet of natural gas and 30,000 barrels of liquids daily.

To finance the purchase, Canadian Natural Resources secured a $4 billion term loan from The Bank of Nova Scotia and Royal Bank of Canada. The company also announced a 7% increase in its quarterly dividend.