Shell weighs Permian JV exit

Royal Dutch Shell and Anadarko Petroleum are considering giving up on a 10-year-old Permian Basin joint venture (JV) when it expires later this year.

According to recent remarks by Shell executive Greg Guidry, the two companies are negotiating how to best divide some 1,416 square kilometres of assets, which are currently scattered in an arrangement that would inhibit efficient development.

The acreage lies in the Permian’s Delaware Sub-basin, an area along the Texas-New Mexico border that has been the hotspot of US shale activity of late.

If the deal expires without any further arrangements made, Anadarko will be the operator with a 60% interest, Reuters reported on Monday. Shell, however, is interested in having more control over its Permian assets and developing its shale holdings.

The company reportedly is looking to increase its North American shale production by 140,000 bopd in the next three years.

Now-retired Shell CFO Simon Henry commented on the agreement in February when he told investors the company would like to see the JV’s operating structure “consolidated in a different way.”

According to Guidry, Shell is now proposing to cut ties with the JV all together. “We could have ideally two 100 percent owned and operated parcels,” Guidry said.