For US$6.5b Canadian Natural Resources is purchasing Chevron's Alberta holding

For US$6.5 billion, Canadian Natural Resources Ltd. has agreed to purchase Chevron Canada Ltd.'s stakes in the Athabasca Oil Sands Project and the Duvernay shale.

One of the biggest independent oil and gas producers in the world, CNRL, with its headquarters in Calgary, will purchase Chevron's 20% stake in the Athabasca Oil SaSands Project in an all-cash agreement.

This comprises a 20 percent ownership in the northern Albertan mines of Muskeg River and Jackpine, in addition to a 20 percent ownership in the northeastern Scotford Upgrader and the northwestern Quest carbon capture and storage project.

Through the agreement, CNRL increases its working stake from 70% to solidify control over the Athabasca Oil Sands project.

up to 90%. The final 10% is owned by Shell Canada.

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The deal increases CNRL's production by about 62,500 barrels of synthetic crude oil per day. CNRL president Scott Stauth stated during a Monday conference call with analysts that the business will be able to maximize its output in the area and discover efficiencies due to the Athabasca site's near proximity to CNRL's Horizon oilsands project.

"I can see us utilizing the equipment more efficiently between the two sites," Stauth stated.

"In the future, (Athabasca) will have potential to enhance output. You can search for such in the future because the assets are comparable to Horizon in terms of the reserve."

Along with the agreement, American corporation Chevron becomes the most recent foreign firm to leave Canada's oilsands. Other companies that have recently taken comparable actions include Murphy Oil of Arkansas, Total SA of France, and Statoil of Norway.

Chevron spokeswoman Jennifer Werbicki confirmed in an email that the business will no longer have interests in the oilsands following the closure of the acquisition.

She declared that Chevron will keep its interests in British Columbia and Northern Canada, as well as its non-operated interests offshore of Atlantic Canada.

Additionally, Canadian Natural will purchase Chevron's 70% operated working interest in light crude oil and liquids-rich properties located in Alberta's Duvernay shale play. According to CNRL, production from the assets is anticipated to average 60,000 boe/d by 2025.

The business is already a significant producer of light crude oil and natural gas, with a sizable land base in Western Canada. Stauth noted that CNRL has the potential to increase output to 70,000 boe/d by 2027 and mentioned that there are "significant" new drilling prospects among the Chevron sites being bought.

Acquisitions have historically allowed CNRL to increase the size of its asset base. In 2017, the business purchased its current interest in the Athabasca Oil Sands project from Shell Canada and Marathon Oil. In 2019, it paid $3.8 billion to acquire the Canadian operations of the United States-based Devon Energy.

One of the reasons CNRL has been a darling of the financial world in recent years is its capacity to maximize production through clever acquisitions.

Not too long ago, Greg Pardy, an analyst at RBC Capital Markets wrote a note to clients referring to CNRL as his "favourite senior producer". According to Pardy, the business and other major players in the oilsands are more financially resilient than ever and are reaping the benefits of the Trans Mountain pipeline expansion, which went online earlier this year.

"We remain unapologetically bullish on Canada's oilsands majors in particular," Pardy stated.

The agreement between CNRL and Chevron is scheduled to close in the fourth quarter of 2024, with an effective date of September 1, 2024.

Additionally, on Monday, CNRL said that it will raise its quarterly dividend to shareholders by 7%, to 56.25 cents per share, beginning with its upcoming regular payment in January 2025.

On Monday, the stock prices of CNRL and Chevron were both heading upward. CNRL stock increased at lunchtime, 3.89 percent had increased, whereas Chevron had gained 0.58%.