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Shell sells non-core assets to Tourmaline Oil Corp. for US$1.04 billion

Royal Dutch Shell (ticker: RDSA) announced that its Canadian subsidiary has sold approximately 206,000 net acres of oil and gas properties, three 100%-operated gas plants and 719 kilometers (447 miles) of pipelines for US$1.04 billion (C$1.37 billion). The consideration is comprised of US$758 million in cash and shares in the purchasing company – Tourmaline Oil Corp. (ticker: TOU) – valued at US$279 million, according to Shell’s press release.

The acquisition consists of 382 gross sections in the Alberta Deep Basin with current production of 18.7 MBOEPD, 101 sections in the Montney with current production of 6.2 MBOEPD, and Shell’s midstream assets, according to Tourmaline.

Shell’s infrastructure, which include three gas plants with total capacity of 200-225 MMcf/d, will bringing the company’s total processing capacity to 1.0 Bcf/d. Tourmaline said it plans to add approximately 100 MMcf/d of new production from the Deep Basin assets by drilling 31 horizontal wells in order to fill the acquired infrastructure capacity. TOU plans to drill 13 horizontal wells in on the Montney land in 2017, and 54 wells in 2018.

tou-shell-shale-assets

Including the acquired acreage from Shell, Tourmaline expects 2017 production of approximately 255 MBOEPD at the midpoint of its guidance, and 315 MBOEPD at the midpoint of 2018 guidance.

Tourmaline plans to fund the cash portion of the acquisition through committed concurrent equity financing deals totaling C$739.4 million and its existing credit facilities.


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