<article><p><i>Adds details throughout.</i></p><p class="lead">ConocoPhillips consolidated its position as a leading Permian basin oil producer with the $9.5bn cash purchase of Shell's holdings in the top US shale field.</p><p>The latest in a series of mergers in the shale patch will see the US independent acquire about 225,000 net acres in Texas, in addition to over 600 miles of operated crude, gas and water pipelines and infrastructure. The assets are expected to produce about 200,000 b/d of oil equivalent (boe/d) next year, and boosts ConocoPhillips' production in the Permian by 40pc to about 610,000 boe/d, according to analysts at RBC Capital Markets. </p><p>Shell has been under pressure to accelerate its strategy for the energy transition after a Dutch court ruled that the company must sharply reduce its CO2 emissions this decade. </p><p>It is the second major acquisition in the Permian for ConocoPhillips, which <a href="https://direct.argusmedia.com/newsandanalysis/article/2151771?keywords=concho%20resources">snapped up Concho Resources</a> for $9.7bn last year.</p><p>"We were presented with a unique opportunity to add premium assets at a value that meets our strict cost of supply framework and brings financial and operational metrics that are highly accretive," ConocoPhillips' chief executive Ryan Lance said.</p><p>Shell said the cash proceeds will help fund $7bn in additional shareholder distributions after closing. Its Permian business recorded a pretax operating loss of $491mn in 2020, a year in which energy demand collapsed due to the pandemic. </p><p>In tandem with the deal, ConocoPhillips said it is boosting its quarterly dividend by 7pc to 46¢ a share. The newly-acquired assets are expected to yield cash from operations of $2.6bn next year and free cash flow of $1.9bn, based on futures prices and estimated output. The transaction is expected to close in the fourth quarter.</p><p>ConocoPhillips plans to boost non-core asset sales to $4bn-$5bn by 2023 from a previous goal of $2bn-3bn. The increase in divestments will come mainly from the Permian.</p><p>The company also announced new targets for lowering greenhouse-gas emissions intensity at its upstream operations. A previous 2030 reduction target of 35pc-45pc will be increased to 40pc-50pc from 2016 levels.</p><p>Shale drillers have held back from ramping up output this year even as oil prices recover, heeding calls from investors to improve returns after years of reckless spending. They have also been under pressure to come up with plans to <a href="https://direct.argusmedia.com/newsandanalysis/article/2222259?keywords=ConocoPhillips%20and%20net-zero">move toward a lower-carbon future</a>.</p><p class="bylines"><i>By Stephen Cunningham</i></p></article>
