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Shell, ConocoPhillips $6.8B oil sands share selloff risks flooding market

May 26, 2017 6:35 PM ETShell plc (SHEL) StockCOP, SHEL, CNQ, CVEBy: Carl Surran, SA News Editor56 Comments
  • Plans by Royal Dutch Shell (RDS.A, RDS.B) and ConocoPhillips (NYSE:COP) to flip $6.8B worth of stakes in Canadian oil sands producers after acquiring them just months ago raises fresh doubts about investor confidence in the area and threatens to swamp Canadian equity markets, Reuters reports.
  • The two companies acquired shares in Canadian Natural Resources (NYSE:CNQ) and Cenovus Energy (NYSE:CVE) as part of deals struck earlier this year to sell off oil sands assets, but reports say Shell has decided to sell its $4.1B stake in CNQ and COP has said it is not a long term investor in CVE.
  • Shell’s decision to sell its 8.8% stake in CNQ is a “surprise and not immaterial,” according to a source familiar with the latter’s thinking, and COP owns nearly 20% of CVE in a stake worth ~$2.7B.
  • “I would be very cautious about investing in more traditional oil production like the oil sands on a longer-term basis,” says David Cockfield, managing director of Northland Wealth Management, which holds some CNQ stock for clients.
  • “The share overhang is one of the reasons we should not expect much movement upward in the Cenovus share price,” says Len Racioppo, managing director of Coerente Capital Management, a CVE shareholder.

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