Royal Dutch Shell PLC is selling its 8-per-cent stake in Canadian Natural Resources Ltd. in a $4.3-billion secondary offering that ranks as one of the largest-ever Canadian share sales.
The sale, priced at US$34.10 a share, came as U.S. crude oil rose above US$70 a barrel for the first time in 3½ years. The sale price for the stock is 2.9 per cent below Canadian Natural’s closing quote on Monday, according to the term sheet.
The offering will be watched closely by the market as an indication of investor appetite for Canadian energy shares following a lengthy period of negative sentiment that has recently dissipated with the improvement in crude oil prices and smaller discounts on heavy crude.
Shell acquired the 97.5 million Canadian Natural shares in partial payment for the Canadian company’s US$8.5-billion acquisition of its Alberta oil-sands operation, a deal that closed almost a year ago. As a secondary offering by the Anglo-Dutch oil major, Canadian Natural gets none of the proceeds from the sale of its shares.
Since the acquisition closed, Canadian Natural shares have climbed more than 16 per cent.
Shell said in a statement it would use the sale proceeds, the equivalent of US$3.3-billion, to reduce its net debt, which stood at US$66.1-billion at the end of the first quarter of 2018. Canadian Natural declined comment.
The syndicate for the offering is led by Goldman Sachs Group Inc., Bank of Nova Scotia, Royal Bank of Canada and Toronto-Dominion Bank. The bought deal ranks close to a $4.42-billion offering by TransCanada Corp. in 2016 and a $4.33-billion offering by Barrick Gold Corp. in 2009.