Shell has pulled out of its last high-profile upstream operation in California by completing the sale of majority stake in Aera Energy, headquartered in Bakersfield, and with around 13,000 wells in the state’s San Joaquin Valley producing oil and associated gas.
The divestment process involved Shell completing the sale of its 100 percent interest in Shell Onshore Ventures LLC which held a 51.8 percent interest in Aera Energy to two asset management firms for around $2 billion in cash with additional contingent payments based on oil prices.
Aera Energy was created as a joint venture between Shell and ExxonMobil and is California's second-largest oil and gas producer, accounting for nearly 25 percent of the state's production.
“The sale is part of Shell’s strategy to create a resilient and competitive Upstream portfolio by focusing on positions with high growth potential and a strong integrated value chain,” said Shell.
The European major will still be active in California, though with a lower profile from its other activities including LNG fuelling stations, gas and power trading and electric vehicle charging.
Canada Pension Plan Investment Board (CPP Investments) is partnering with Hamburg, Germany-based international asset management group IKAV to acquire Aera Energy.
California demands
“CPP Investments and IKAV intend to help Aera balance its energy transition efforts with the need to continue meeting California's conventional energy demands by investing in a renewable energy portfolio that will power Aera's existing operations,” they said.
“Over time, renewable power will be deployed across Aera's land holdings, while selected legacy oil and gas infrastructure will be repurposed to create carbon capture and storage capability,” the buyers explained.
Constantin von Wasserschleben, Chairman of IKAV, said his firm was aligned with CPP Investments in its commitment to achieving a smooth and sustainable transition to renewable energy.
“By delivering an energy solution at Aera that ties renewable growth with the safe and responsible operation of conventional energy assets, we are pursuing the right steps to balance California's energy demand with its future climate goals,” added Von Wasserschleben.
Bruce Hogg, Managing Director, Head of Sustainable Energies at CPP Investments, comments the Toronto-based firm’s investment in Aera Energy was consistent with a number of investments made to help California with its “green” energy policies.
“CPP Investments believes that enabling emissions reduction and business transformation in the energy sector can drive strong returns for long-term investors,” stated Hogg.
