CHRL's deal with Chevron will boost production by around 9 per cent in 2025, or 122,500 barrels a day, and add about 1.448 billion barrels of oil to the company’s total proved and probable reserves.TODD KOROL/Reuters
Canadian Natural Resources Ltd. CNQ-T has signed a deal to buy a swath of Chevron Canada Ltd. CVX-N oil and gas assets in Alberta for US$6.5-billion.
The deal includes Chevron’s 20-per-cent interest in the Athabasca Oil Sands Project, which includes 20 per cent of the Muskeg River and Jackpine mines, the Scotford Upgrader and the Quest Carbon Capture and Storage facility.
The move will bring CNRL’s total interest in the operations to 90 per cent.
CNRL president Scott Stauth told analysts Monday that the acquisition was a unique buy that will help strengthen the sustainability of the company’s oil sands mining and upgrading assets.
It will boost production by around 9 per cent in 2025, or 122,500 barrels a day, and add about 1.448 billion barrels of oil to the company’s total proved and probable reserves. And it will do so without adding much in the way of operating expenses, he said.
“This is a very attractive acquisition for us,” he said.
Mr. Stauth said the deal would allow CNRL to tap reserves to add “significant production” in its operations, particularly at the Horizon oil sands mining and upgrading facility once its north mine depletes.
“You could also look at a stand-alone development facility at some point there; obviously that would come with significant capital outlay,” he said.
“We’re an enviable position from that perspective.”
The deal is also set to save CNRL around $40-million annually by combining contractors, increasing purchasing power, sharing equipment between sites and reducing the cost of transporting liquids, Mr. Stauth said.
And the company will keep looking for more ways to save money while boosting production, he added.
“We’ll work very hard to achieve the maximum value that we can out of those properties over time.”
As part of the deal, CNRL will also acquire Chevron’s 70-per-cent operated interest of light crude oil and liquids rich assets in the Duvernay play, about 260 kilometres northwest of Edmonton.
The all-cash agreement has an effective date of Sept. 1, 2024, and is expected to close during the fourth quarter of 2024, subject to regulatory approvals and other customary closing conditions.
In addition, CNRL says it will increase its quarterly dividend by 7 per cent to 56.25 cents a share starting with its next regular payment in January, 2025, marking the 25th consecutive year of dividend increases.
The deal comes in the wake of the U.S. Federal Trade Commission’s decision to allow Chevron to buy U.S.-based global energy producer Hess Corp. HES-N for US$53-billion.
Hess shareholders approved the proposal in May, but the contentious all-stock deal – one of the largest in U.S. oil and gas industry history – is far from done.
Exxon Mobil and CNOOC Ltd., Hess’s partners in a Guyana joint venture, are challenging the proposed merger by claiming a right of first refusal to any sale of Hess’s Guyana assets. The court challenge is expected to drag into next year.
The CNRL acquisition is the latest in a line of purchases for the Calgary-based giant.
In 2022, it spent $482-million on two acquisitions in Western Canada – a remaining 50-per-cent working interest in the Pike oil sands lease from BP, and land at Wembley in the Montney shale play in northwestern Alberta.
The Pike play sits right next door to the company’s Jackfish asset in Northern Alberta, which it bought in 2019.
With a report from The Canadian Press