Royal Dutch Shell announced on Monday it was selling its assets in the shale-oil rich Permian Basin of the United States to rival ConocoPhillips for $9.5 billion.
Shell plans to use the proceeds from the sale of the property, which produce an average of 175,000 barrels per day, to fund a $7 billion payout to its shareholders and strengthen its finances, according to a statement.
“After reviewing multiple strategies and portfolio options for our Permian assets, this transaction with ConocoPhillips emerged as a very compelling value proposition,” the company’s upstream director Wael Sawan said.
Straddling western Texas and eastern New Mexico, the Permian Basin is rich in shale oil and gas and produces about 40 percent of the country’s crude.
The assets sold by Shell’s US unit include 225,000 acres of land in Texas with more than 600 miles of oil, gas and water transmission pipes, according to ConocoPhillips.
Shell is highly dependent on profits from oil and gas, but aims to become carbon neutral by 2050. It plans to do this by investing in renewable energy and carbon offsetting technology, as well as reducing its dependence on crude as a source of revenue.
The Anglo-Dutch oil giant has been present in the United States for more than a century, and said it “plans to remain an energy leader in the country for decades to come.”
ConocoPhillips said it hopes to complete the deal by the end of the year. The transaction is subject to approval of regulators.
Last October, the American firm acquired Texas-based shale oil rival Concho Resources in a transaction valued at $9.7 billion.