Shell forks out $735 million for ConocoPhillips’ stakes in its US deepwater oil assets

Shell Offshore and Shell Pipeline Company (SPLC), subsidiaries of the UK-headquartered energy giant Shell, have made a play for interests ConocoPhillips, a U.S. oil major, holds in its assets in the Gulf of America (GoA), formerly named Gulf of Mexico (GoM).

ConocoPhillips has struck a deal with Shell to sell its interests in the Ursa and Europa assets, including Ursa Oil Pipeline Company and an overriding royalty interest in the Ursa field, for $735 million, subject to customary closing adjustments. The U.S. oil major plans to use the proceeds from this transaction for general corporate purposes.

Andy O’Brien, Senior Vice President of Strategy, Commercial, Sustainability & Technology, commented: “Combined with previously announced dispositions, this transaction reflects our ongoing commitment to further strengthen our portfolio by divesting noncore assets and shows significant progress toward our $2 billion disposition target.”

According to ConocoPhillips, the full-year 2024 production associated with its 15.96% interest in the Ursa field and 1% interest in the Europa field was approximately 8,000 barrels of oil equivalent per day (mboed). This divestment is expected to be completed by the end of the second quarter of 2025.

Thanks to this acquisition, with an effective date of January 1, 2025, Shell will boost its stake in these assets, increasing its working interest (WI) in its operated Ursa tension-leg platform (TLP), pipeline, and associated fields from 45.3884% to a maximum of 61.35%, with BP Exploration & Production (22.6916% WI) and ECP GOM III (15.96%) holding the remaining stakes in the offshore platform.

The transaction also encompasses ConocoPhillips’ 15.96% membership interest in the Shell-operated Ursa Oil Pipeline Company, which will be held by Shell Pipeline Company, alongside a 1% WI in the Europa prospect, and a 3.5% overriding royalty interest (ORRI) in Ursa, acquired through the Marathon Oil Corporation merger, which was completed in November 2024.

The operator underlines that the reference to an increase in WI to a maximum of 61.35% is subject to preferential rights election by other WI partners. Shell claims that its Gulf of America production has among the lowest greenhouse gas intensity in the world.

Zoë Yujnovich, Shell’s Integrated Gas & Upstream Director, remarked: “This targeted investment is the latest example of how we are unlocking more value from our existing advantaged Upstream assets and infrastructure. The acquisition expands our ownership in an established long-producing asset that generates robust free cash flow, while also providing more options for growth.”

Located approximately 130 miles (209.21 kilometers) southeast of New Orleans within the Mars Basin, described as one of the most prolific hydrocarbon basins in the world, the Ursa TLP began production in 1999. The Ursa/Princess field has produced over 800 million barrels of oil equivalent total gross over 25 years.

While confirmed that this provided reliable production and growth opportunities, Shell emphasized: “Increasing our working interest in Ursa demonstrates our continued focus on providing secure supplies of domestic energy and pursuing the highest margin and most energy-efficient Upstream investments.”

Recently, speculation over a potential business combination between the company and its rival, BP, gained momentum. However, Shell’s spokesperson told Offshore Energy that “no significant inorganic acquisitions” were being pursued as the firm considers its own shares as “an extremely attractive investment opportunity,” preferring to “allocate capital to them than elsewhere.”