ConocoPhillips Adds ‘Prime’ Permian Assets In Major Deal

ConocoPhillips (COP) bought the Permian assets of Royal Dutch Shell (RDSA) in the largest cash upstream deal in three years. COP stock rose.


Conoco is paying $9.5 billion for Shell’s approximately 225,000 net acres in Texas’ Delaware Basin, which is part of the Permian. Conoco sees estimated 2022 production from the averages to be 200,000 bpd.

Shell said the proceeds from this transaction will be used to fund $7 billion in additional shareholder distributions.

The sale of Shell’s last Permian holdings comes after a Dutch court ruled in May that Shell is partly responsible for climate change and ordered the company to slash carbon emissions 45% by 2030 vs. 2019 levels.

Conoco shares rose 1.6% in premarket trading on the stock market today. Shell’s U.S. listed shares popped 4.3%. On Monday, COP stock retreated 3.1% and RDSA stock 2.2%

Some of that reflects crude oil prices rebounding about 1% after retreating nearly 2% Monday in the global market sell-off.

Conoco Buying Spree

ConocoPhilips has been on a shale buying spree during the pandemic. In October it bought Concho Resources for $12.3 billion solidifying its stake as the biggest U.S. independent producer.

“After waiting patiently on M&A opportunities through the land-rush years of the shale boom, Conoco has been able to pick up prime Permian real estate at what looks to be attractive price points,” said Andrew Dittmar, Senior M&A Analyst at Enverus.

Enverus estimates that Concho is paying about $15,000 per acre for Shell’s position vs. the $60,000 per acre Occidental (OXY) paid for nearby land when it bought Anadarko in 2019.

Conoco also announced it would increase its quarterly dividend from 43 cents per share to 46 cents, payable on Dec. 1.

Follow Gillian Rich on Twitter for energy news and more.


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