Canadian Natural Resources Limited CNQ and Shell Canada, an affiliate of Shell plc SHEL, have agreed on an asset swap transaction relating to the transfer of a working interest in the Athabasca Oil Sands Project (AOSP).
The deal is expected to close by the first quarter of 2025, subject to certain regulatory approvals.
According to the deal, CNQ will trade 10% of its working interest in the Scotford Upgrader and Quest Carbon Capture and Storage facilities in exchange for Shell’s 10% working interest in the AOSP mines, associated reserves and additional working interests in some other non-producing oil sands leases.
As a result of this deal, CNQ will acquire 100% working interest in the AOSP assets, resulting in an increase in its production capacity by approximately 31,000 barrels per day (bbl/d) and will retain 80% working interest in the Scotford Upgrader and Quest facilities. The deal does not involve any cash exchange except for certain closing adjustments.
Canadian Natural, currently carrying a Zacks Rank #3 (Hold), is well positioned with its long-life, low-decline assets combined with operational efficiency that continues to generate significant free cash flow for decades.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
This transaction will further enhance CNQ’s diversified sales strategy by meeting the commitment of 169,000 bbl/d on the Trans Mountain Expansion pipeline and 87,500 bbl/d to the U.S. Gulf Coast and providing access to global markets.
While this asset swap was not included in Canadian Natural’s initial 2025 production guidance, the company plans to revise its outlook once the deal is finalized.
Investors interested in the energy sector might look at some top-ranked stocks like SM Energy Company SM and Sunoco LP SUN.
Denver, CO-based SM Energy Company is an independent oil and gas company engaged in the exploration, exploitation, development, acquisition and production of natural gas and crude oil in North America. The Zacks Consensus Estimate for SM’s 2024 earnings indicates 15.11% year-over-year growth.
Dallas, TX-based Sunoco LP is a master limited partnership that deals with the distribution of motor fuel to roughly 10,000 customers, including independent dealers, commercial customers, convenience stores as well as distributors. The Zacks Consensus Estimate for SUN’s 2024 earnings indicates 184.11% year-over-year growth.
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