Tourmaline buying Shell assets in Alberta

Tourmaline Oil Corp. is buying a significant package of shale oil and gas assets from Royal Dutch Shell for $1.37 billion, as the energy giant makes a further retreat from Canada.

In the deal announced late Thursday, Tourmaline will acquire about 58,700 hectares in the Deep Basin area of west-central Alberta and 24,700 hectares in the Gundy area of northeastern British Columbia.

Together the properties currently produce the equivalent of 24,850 barrels of oil a day, though production is heavily weighted to natural gas.

Tourmaline will also gain control of three natural gas processing plants, 719 kilometres of pipelines and thousands of future drilling targets. The Calgary-based company will pay for the assets with about $1 billion in cash, funded in part through $739 million in financing and the rest in shares.

Shell said the assets were noncore and it still has about 262,000 hectares of shale properties in Canada, but the deal does represent a further narrowing of its Canadian operations after cancelling its Carmon Creek oilsands project last October and indefinitely deferring its LNG Canada project.

“Shell retains a significant shale position in Canada and we are actively working to mature our attractive core asset base in the Montney and Duvernay,” Andy Brown, Shell’s upstream director, said in a statement.

“At the same time we are strengthening our shales business and creating shareholder value by selling assets that do not fit our near-term development plans.”