CALGARY, Alberta, Oct. 21 (UPI) -- The Canadian subsidiary of Royal Dutch Shell said it was shedding some of its assets in the country for $1 billion in an effort to build shareholder value.
Shell Canada agreed to sell more than 200,000 acres of what is considers non-core oil and gas properties in Western Canada to Tourmaline Oil Corp. for $1.03 billion. All told, Shell said the acreage was producing about 24,850 barrels of oil equivalents per day. Shell keeps about 648,000 acres in Alberta and British Columbia.
For Tourmaline, the company said the acquisition gives momentum to its strategic efforts to build its presence in Canada. By buying Shell's acreage, the company said it was increasing its estimate of total production. Next year, Tourmaline expects up to 260,000 barrels of oil equivalent per day and up to 320,000 boe per day by 2018.
Shell this year has moved away from other North American projects, saying in July that capital constraints were in part behind a decision to delay a final investment decision for a gas export facility in Canada.
Mounting financial pressures brought on in part by lower crude oil prices and obligations following its merger with British energy company BG Group led the company to call for "lasting changes" in its operations. The company said it still was a relevant player in Canada, even after the $1 billion sale.
"At the same time we are strengthening our shale business and creating shareholder value by selling assets that do not fit our near-term development plans," Andy Brown, Shell's upstream director, said in an emailed statement.
For Tourmaline, the company said it's anticipating cash flow for the third quarter will be 38 percent higher than the previous quarter, which it attributed in part to market recovery.