Accelerating the energy transformation, oil giant Shell has taken another important step.
According to the Wall Street Journal, Shell has agreed to sell all of its assets in the Permian Basin, the largest oil field in the United States, to ConocoPhillips for approximately US$9.5 billion.
This marks Shell’s accelerated shift from its traditional oil and gas business to low-carbon assets.
According to reports, Shell has 225,000 acres of shale development area in the Permian Basin, with current daily production of approximately 175,000 barrels of oil equivalent, accounting for approximately 10% of its global oil and gas production last year. 6% of total output.
ConocoPhillips said in a statement that it expects production from these assets to be approximately 200,000 barrels of oil equivalent per day by next year.
After the oil price plummeted, the shale oil industry ushered in a wave of bankruptcies and mergers. In October last year, ConocoPhillips announced the acquisition of rival Concho Resources in an all-stock transaction for US$9.7 billion, becoming the top shale oil producer in the Permian Basin. Shale oil and gas production in the region is recovering as oil prices rise.
As one of the world’s largest oil companies, Shell is accelerating its transformation and business adjustments. Its total oil production is decreasing at an annual rate of 1%-2%. Correspondingly, Electricity, hydrogen energy, biofuels, etc. are becoming new growth businesses.
In September last year, Reuters reported that Shell was conducting a company-wide cost reduction assessment that could reduce oil and gas production costs by up to 40% to save cash and focus more on Invest in renewable energy and electricity markets.
However, in the process of realizing the energy transition, traditional upstream businesses will continue to provide important energy supplies, provide the required cash flow, and accelerate investment in future growth businesses. From the perspective of net profit, Shell performed exceptionally, achieving a net profit of US$9.088 billion in the first half of 2021.
According to the transformation strategy announced by Shell, Shell plans to become a large-scale low-carbon enterprise by the early 2030s and achieve the goal of becoming a net-zero emission energy enterprise by 2050.
In the short term, Shell’s strategy will be to rebalance its business portfolio and invest US$5-6 billion annually in future growth businesses (including approximately US$3 billion in marketing; renewable energy and energy solutions businesses US$2-3 billion), investing US$8-9 billion in transformation support business (of which natural gas integration is approximately US$4 billion; chemical and chemical products business is US$4-5 billion), and investment in traditional upstream business is approximately US$8 billion.
By streamlining traditional oil and gas assets, giants such as Shell are reshaping their traditional business structures and accelerating their transformation into integrated energy companies. </p
