Shell to Sell Orion Oil Sands Project to Osum for C$325M - Analyst Blog

The Canadian arm of the integrated energy behemoth, Royal Dutch Shell plc ( RDS.A ) has entered into an agreement with private oil sands producer, Osum Oil Sands Corp. to sell its Orion Oil Sands Project, located in the Cold Lake oil sands area in Alberta.

Shell is likely to receive about C$325 million from the deal, the closure of which is anticipated on or around Jul 31. Post the completion of this transaction, Osum will be the 100% stake owner as well as operator of the project.

The Orion Oil Sands Project had started commercial production in 2007. For the first quarter of 2014, the project yielded about 6,700 barrels of bitumen per day from 22 well pairs. At the forecasted rate of production, the project is estimated to have an economic life of over 25 years.

Earlier in the week, Shell announced that the international oil major, ConocoPhillips ( COP ), and Canada's biggest energy firm and largest oil sands outfit, Suncor Energy Inc. ( SU ) will become joint venture partners in the company's Deepwater Shelburne Basin Venture Exploration Program, off Nova Scotia, Canada. The agreement entitles Shell to farm down non-operated equity in its Shelburne Exploration Licenses. Shell will remain the operator with a 50% interest in the project, while ConocoPhillips and Suncor will have 30% and 20% stake respectively.

Shell is one of the major integrated energy firms in the world with a large and diversified portfolio of development projects that offer attractive long-term opportunities. The company currently has a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader US market in the next one to three months.

Meanwhile, one can consider a better-ranked player from the integrated oil space such as Statoil ASA ( STO ) that has a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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