Shell Completes Divestment of Oil Sands Interests in Canada

CALGARY, Alberta, May 31, 2017 /PRNewswire/ --

Royal Dutch Shell plc today announces the completion of two previously announced agreements by Shell Canada Energy, Shell Canada Limited and Shell Canada Resources ("Shell") that will see Shell sell all its in-situ and undeveloped oil sands interests in Canada and reduce its share in the Athabasca Oil Sands Project (AOSP) from 60% to 10%.   

Under the first agreement, Shell has completed the sale to a subsidiary of Canadian Natural Resources Limited ("Canadian Natural") its entire 60% interest in AOSP, its 100% interest in the Peace River Complex in-situ assets, including Carmon Creek, and a number of undeveloped oil sands leases in Alberta, Canada. The consideration to Shell from Canadian Natural is approximately $8.2 billion (C$10.9 billion), comprised of $5.3 billion in cash plus around 98 million Canadian Natural shares currently valued at $2.9 billion. Shell's share position in Canadian Natural will be managed for value realisation over time.

Separately and under the second agreement, Shell and Canadian Natural have completed the joint acquisition and now own equally Marathon Oil Canada Corporation ("MOCC"), which holds a 20% interest in AOSP, from an affiliate of Marathon Oil Corporation for $1.25 billion each.  

As previously announced, the transactions were estimated to result in a post-tax impairment of $1.3 to $1.5 billion of which $1.1 billion was taken in Q1, 2017 with a further $0.4 billion expected in Q2, 2017 based on final closing adjustments. 

Effective June 1, 2017, Canadian Natural will operate the AOSP upstream mining assets, while Shell will continue as operator of the Scotford upgrader and Quest carbon capture and storage (CCS) project, located next to the 100% Shell-affiliate-owned Scotford refinery and chemicals plants.

Shell retains significant operations in Canada that are not affected by these transactions, including, in Upstream shales, with large acreage positions in the Duvernay and Montney formations; Downstream through chemicals, refining and marketing; and in Integrated Gas with the proposed LNG Canada project. 

NOTES TO EDITORS

• Pursuant to the completion of the transactions set out in this announcement, the Athabasca Oil Sands Project (AOSP) is now a joint venture between Canadian Natural Upgrading Limited (60%), Chevron Canada Limited (20%), and Marathon Oil Canada Corporation (20% which is owned 50% by a Shell-affiliate and 50% by Canadian Natural Resources Limited).
• The AOSP includes the Albian Sands mining and extraction operations (Muskeg River and Jackpine mines) north of Fort McMurray, Alberta, and the Scotford upgrader and Quest CCS project northeast of Edmonton, Alberta.
• The 100% Shell-affiliate-owned Scotford refinery and chemicals plants, adjacent to the Scotford upgrader and Quest CCS project, are not included in the divestment.
• The Peace River Complex includes facilities at Peace River, Carmon Creek and Cliffdale.

Related announcements:

Shell divests oil sands interests in Canada for net consideration of US$7.25 billion (http://www.newswire.ca/news-releases/shell-divests-oil-sands-interests-in-canada-for-net-consideration-of-725-billion-625502273.html)

Cautionary note 

The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate legal entities. In this announcement "Shell", "Shell group" and "Royal Dutch Shell" are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words "we", "us" and "our" are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. ''Subsidiaries'', "Shell subsidiaries" and "Shell companies" as used in this announcement refer to companies over which Royal Dutch Shell plc  either directly or indirectly has control. Entities and unincorporated arrangements over which Shell has joint control are generally referred to as "joint ventures" and "joint operations" respectively.  Entities over which Shell has significant influence but neither control nor joint control are referred to as "associates". The term "Shell interest" is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.

This announcement contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management's expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as ''anticipate'', ''believe'', ''could'', ''estimate'', ''expect'', ''goals'', ''intend'', ''may'', ''objectives'', ''outlook'', ''plan'', ''probably'', ''project'', ''risks'', "schedule", ''seek'', ''should'', ''target'', ''will'' and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this announcement, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell's products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. No assurance is provided that future dividend payments will match or exceed previous dividend payments.. All forward-looking statements contained in this announcement are expressly qualified in their entirety by the cautionary statements contained or referred to in this announcement. Readers should not place undue reliance on forward-looking statements. Additional risk factors that may affect future results are contained in Royal Dutch Shell's 20-F for the year ended December 31, 2016 (available at http://www.shell.com/investor and http://www.sec.gov). These risk factors also expressly qualify all forward looking statements contained in this announcement and should be considered by the reader.  Each forward-looking statement speaks only as of the date of this announcement, May 31, 2017. Neither Royal Dutch Shell plc nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this announcement.

The share price used to value the share portion of the transaction is based on ticker TSE: CNQ at 10 am Mountain standard  time May 31, 2017.

We may have used certain terms, such as resources, in this announcement that United States Securities and Exchange Commission (SEC) strictly prohibits us from including in our filings with the SEC.  U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website http://www.sec.gov

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