03/09/2017 08:46 EST | Updated 03/10/2017 08:56 EST

Shell, Marathon Sell Oilsands Stakes In $12.74-Billion Blockbuster Deal

TORONTO — Canadian Natural Resources will spend C$12.74 billion in cash and shares to acquire the bulk of Royal Dutch Shell's oilsands holdings and half of Marathon Oil's minority stake in the Athabasca Oil Sands Project in Alberta.

The blockbuster deal, announced early Thursday, will see Royal Dutch Shell get US$5.4 billion cash and nearly 98 million Canadian Natural shares from the Calgary-based company. Together they are worth about US$8.5 billion or C$11.1 billion.

Separately, Canadian Natural and Shell will jointly buy Marathon's 20 per cent share of the Athabasca Oil Sands project for a total of US$2.5 billion cash.

Photo: Reuters/Murad Sezer

Canadian Natural says as part of the agreements, it will welcome approximately 3,100 employees from Shell and Marathon Oil. About 2,760 of them work at the mines, 110 are at the Peace River in situ operations and 230 are based in Calgary.

Canadian Natural president Steve Laut said the transactions will increase the reliability of CNRL's cash flows from oilsands operations, which include the Horizon mining and extraction plant north of Fort McMurray, Alta.

"Further, these transactions are beneficial and positive for all stakeholders as it allows focus on the key operating strengths of both Shell and Canadian Natural to deliver efficient and safe operations,'' Laut said.

Shell's Scotford upgrader, refinery and chemical plant near Fort Saskatchewan, Alberta on Aug. 30, 2016. (Photo: The Canadian Press/Larry MacDougal)

Besides the mines, in situ extraction operations and undeveloped lands, Canadian Natural will acquire the Scotford Upgrader and the Quest carbon capture and storage project north of Edmonton from Shell. The transaction doesn't include any interest in Shell's Scotford refinery or chemical plants.

Royal Dutch Shell says it will receive US$7.25 billion in net considerations from Canadian Natural, after paying US$1.25 billion for its share for acquiring Marathon Oil Canada, which holds Marathon's 20 per cent interest in the Alberta Oil Sands Project..

Shell would remain the operator of Scotford upgrader and Quest carbon project. Canadian Natural would operate Athabasca's upstream mining assets.

The transactions are expected to close in mid-2017, subject to regulatory approvals.

Shell CEO Ben van Beurden said the deals are a "significant step'' in re-shaping Shell's portfolio in line with its long-term strategy.

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