Canadian Natural Resources (CNRL) agreed to buy a 20pc stake in the Athabasca Oil Sands Project (AOSP) and 70pc interest in the Duvernay shale from Chevron for $6.5bn, extending its lead as Canada's top producer.
The all-cash transaction has an effective date retroactive to 1 September, the companies said Monday. Closing is expected during the fourth quarter.
The assets being sold accounted for about 84,000 b/d of oil equivalent (boe/d) of production, net of royalties, to Chevron last year.
Chevron last October announced plans to acquire US independent Hess for $53bn, pledging to sell $10bn-$15bn of assets by 2028. While the Hess deal has been delayed by a mid-2025 arbitration hearing, Chevron, the second-largest US oil producer, has increasingly focused its attention on the Permian shale basin of west Texas and southeastern New Mexico, as well as an expansion project in Kazakhstan.
CNRL's acquisition bolsters its position as Canada's largest petroleum producer after pumping out 1.29mn boe/d of oil and gas in the second quarter this year. About 72pc came from oil and natural gas liquids (NGLs), with the balance from natural gas.
CNRL anticipates the oil sands and Duvernay assets will lift the company's production profile by about 122,500 boe/d in 2025. About half, or 62,500 b/d, will come in the form of synthetic crude oil produced from AOSP's 320,000 b/d Scotford upgrader near Edmonton, Alberta. The upgrader is fed diluted bitumen piped from the Muskeg River and Jackpine mines in the oil sands region.
The deal would increase CNRL's stake in AOSP to 90pc. Calgary-based CNRL first made its foray into AOSP in 2017 when it bought a 70pc stake from Shell and Marathon Oil Canada for $9.75bn ($C$12.74bn).
Muskeg River and Jackpine are adjacent to the company's fully owned Horizon mine and upgrader, and the increase in ownership may allow for increased synergies between the two assets, according to executives.
"It allows for a little bit more ease in terms of governance on the asset," CNRL president Scott Stauth said Monday on an investor call. "I can see us utilizing the equipment more effectively between the two sites."
Undeveloped oil sands projects
Also included in Monday's deal are additional stakes in undeveloped oil sands leases that CNRL could tap as it works through its reserves. This includes a 20pc increase the Pierre River project that would provide CNRL with 90pc ownership; a 60pc increase in the Ells River project that would lift the company's stake to 90pc; a 33pc increase in the Saleski project, for 83pc; and a 6pc working interest in Namur that would reach 65pc.
Reserves from Pierre River could be used to extend the life of the Horizon project as the North Mine depletes. A standalone facility there is also possible, but would require a significant capital outlay, CNRL executives said.
CNRL in May said it was considering a massive 195,000 b/d increase to its Horizon production using two new technologies.
CNRL said production from the light oil and liquids rich assets in the Duvernay is expected to average 60,000 boe/d in 2025, half of which would be natural gas. CNRL anticipates pushing production to 70,000 boe/d by 2027 with more than 340 locations already identified as candidates for drilling.
With WTI above $70/bl, "this is a very attractive acquisition for us," CNRL chief financial officer Mark Stainthorpe said.
CNRL has been actively acquiring assets in recent years. The company purchased Canadian assets belonging to Painted Pony in 2020, Devon Energy in 2019, TotalEnergies in 2018 and Cenovus Energy in 2017, among other deals.
