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03/02/2021

Shell Canada leaving Fox Creek area

For many energy companies, 2020 was a terrible year that started with the OPEC price war followed by the pandemic. Financial advisors have suggested a few reasons for the significant increase in M&A transactions that's happening and expected to continue through 2021. In the case of small to medium-sized oil and gas companies, acquisitions through insolvency procedures are more predominant. Unfortunately, these companies cannot attract the capital to continue and can no longer get funding from the banks. Insolvency is the last option. For the larger companies with capital, they are looking for more growth through acquisition rather than drilling. These companies are looking for other oil and gas plays that can be purchased at a lower price and provide immediate returns on their investment.

One of the most recent acquisitions announced this month is the sale of Shell Canada's land holdings in the Duvernay field around Fox Creek. “Shell has reached an agreement with Crescent Point Energy Corp to sell its Duvernay shale light oil position in Alberta for a total consideration of $900 million.'' as stated in their media release. The transaction is expected to close in April 2021. The sale includes transferring approximately 450,000 net acres in the Fox Creek Kaybob and Rocky Mountain House Willesden Green areas and related infrastructure. Well, licenses will be transferred over to Crescent Point, subject to regulatory approval. Chris Sillito,External Relations with Shell Canada, added, “Crescent Point will retain the Shell field employees and several technical and commercial roles that support the assets.''

The news came as a shock to many in Fox Creek, as Shell has been a pillar of the community for many years. The company didn't just have an interest in the Duvernay field but invested heavily into its community. Some of Shell Canada's contributions include the partnership in which Shell can use the Town of Fox Creek's treated wastewater for its operations in exchange; Shell funded the engineering and design to upgrade the town's raw water facilities. The company has also sponsored the gymnasium in the new Multiplex, which is named the Shell Fieldhouse. Other contributions consist of making donations and sponsorships to the many smaller non-profit organizations in the community. Many contributions were also made to the Food Bank, the Friends of Fox Creek Hospital Society, to purchase medical equipment at the hospital. Other donations were made to the Fox Creek School, volunteering through the annual Day of Caring, Annual Grant Programs put out to the students to further their education, scholarships for graduates. The list could go on, but it's a glimpse into the support Shell has given to the community over the years.