Royal Dutch Shell subsidiary Shell Enterprises plans to part ways with its Permian Basin assets in west Texas, the company announced Monday.
ConocoPhillips, which is based in Houston, has entered into a purchase and sale agreement by which it will acquire the roughly 225,000 net acres, in addition to over 600 miles of operated crude, gas and water pipelines and infrastructure, for $9.5 billion in cash. The assets currently produce about 175,000 barrels per day.
Providing advisory services to Shell were Morgan Stanley & Co. and Tudor, Pickering, Holt & Co. on financial matters with Norton Rose Fulbright counseling on legal matters.
Houston partner John Mauel and Houston senior associate Jessica Rodriguez led the NRF team, with further Texas-based provided by Houston partners Bob Bruner and Eddie Lewis and Houston associates Constanza Recchini and Alexander Bohn.
Chris Mize led from Morgan Stanley and Maynard Holt and Travis Nichols led from TPH.
Baker Botts advised ConocoPhillips on legal matters while Goldman Sachs & Co. provided counsel on financial matters (led by Scott Hankey).
Additional Texas-based counsel at Baker Botts came from Houston partners Jon Lobb and Derek Green; Dallas partners Matthew Larsen, Jason Loden and Jennifer Trulock; Austin partner Aileen Hooks; and Dallas senior associate Jordan Hahn.
Deputy general counsel, chief compliance officer and corporate secretary Shannon Kinney, formerly of TPC Group, Bracewell and Andrews Kurth, aided in guiding the internal team at ConocoPhillips, according to SEC filings. (The Texas Lawbook profiled Kinney in 2019 in relation to the 2019 Houston Corporate Counsel Awards. Read more here.)
“The assets we’re adding are consistent with our low cost of supply strategy, which is designed to position our portfolio as the most likely to be developed as the energy transition progresses and the need for oil and gas is reduced over time,” said Ryan Lance, ConocoPhillips’ chairman and chief executive officer, in a prepared statement.
“The assets we’re adding improve our ability to generate returns that are consistent with what investors demand through cycles. And the assets we’re adding will bring more low GHG intensity barrels to our mix,” Lance continued.
Should the transaction close, the deal would mark Shell’s complete exit from onshore production in the Lone Star State.
Shell noted that proceeds from the transaction would be used to fund $7 billion in shareholder distributions as the company “provides the energy the world needs today whilst funding shareholder distributions as well as the energy transition.”
The remaining $2.5 billion have been earmarked to bolster Shell’s balance sheet.
ConocoPhillips, which is funding the deal through available cash, is expected to offer employment to the majority of employees based in Midland and Houston impacted by the asset sale.
The transaction, which is subject to regulatory approvals, is expected to close in the fourth quarter.
Rumors of Shell’s exit from the basin peaked during the past few months, first stoked by a key ruling in its Dutch homeland that compelled the oil and gas giant to cut its greenhouse-gas emissions at a quicker clip.
Devon Energy and Chevron Corp., in addition to ConocoPhillips, were listed among the potential suitors for the assets, according to a report from Bloomberg in late July.
Shell first acquired the majority of its Permian assets from Chesapeake Energy back in 2012.
Baker Botts has had a hand in several billion-dollar-plus deals this year as oil and gas companies seek to make meaningful, strategic moves. Some of those deals include Cabot Oil & Gas’ $17 billion merger with Cimarex, CenterPoint Energy’s role in Energy Transfer’s $7.2 billion acquisition of Enable Midstream Partners and Chevron’s $1.3 billion take-private deal for Noble Midstream.