Shell sells oil field in $9.5 billion deal

Royal Dutch Shell on Monday sold its oil and gas production in the Permian Basin, the biggest American oil field, to ConocoPhillips for $9.5 billion in cash.

The deal marks a turning point for Shell, which had put considerable effort into developing the field since buying acreage from Chesapeake Energy nine years ago, expanding its production to about 200,000 barrels a day.

The sale is the latest sign that Shell, like other European oil companies, is under pressure to sell off oil and gas production and move toward producing cleaner energy in response to growing concerns about climate change among investors and the general public.

A wave of acquisitions in the Permian began in the wake of the 2020 pandemic as companies sought to cut costs. The scale of the Shell deal is similar to Conoco’s acquisition of Concho Resources for $9.7 billion in October, a deal that made Conoco a major player in the Permian, which straddles Texas and New Mexico. In April, Pioneer Natural Resources bought DoublePoint Energy for $6.4 billion.

With the acquisition of Shell’s acreage, Conoco consolidates its position as a top-tier Permian producer along with Pioneer, Occidental Petroleum, Exxon Mobil and Chevron.

Shell’s sale of its West Texas Permian holdings, which provided an estimated 6% of the company’s global oil and gas production last year, had been expected for months. Shell recently sold its stakes in offshore oil and gas fields in Malaysia and the Philippines.