WFS--- Initial Thoughts Value over volumes played a big role in Shell's decision to exit the Permian Basin, in our view. With many of its balance sheet issues repaired over the last several quarters, we expect Shell to distribute nearly 75% of the $9.5bn proceeds to shareholders, mostly via buybacks.
Our Call Shell has been our top pick in the IOC sector. Hard decisions (such as exiting a high-profile region) with direct benefits and cash returns to shareholders support our positive view.
Permian Disposition. Shell announced the sale of its Permian assets to ConocoPhillips for $9.5bn. The transaction is expected to close during Q4 2021 with an effective date of July 1, 2021. The transaction is expected to result in a gain of $2.4 to $2.6bn. We expect a minimal cash tax impact given prior years losses and deferred tax assets. Shell's Permian position consists of 225,000 acres and generated 175mboed in 2020. No reserves data was disclosed.