Royal Dutch Shell PLC on Wednesday said it is restructuring its North American business for the second time in four months and parting ways with Marvin Odum, chief of the troubled unit.
The moves upend a reorganization of Shell’s exploration-and-production units announced late last year, eliminating a so-called unconventional oil unit created in November to house the company’s Canadian tar sands projects and its shale projects in the U.S., Canada and Argentina.
Shell said its Athabasca oil sands project in Canada will be absorbed into its refining and marketing arm, while the rest of its Canadian oil sands assets and its shale business will be incorporated into its main exploration and production division.
The move comes at a pivotal time for the Anglo-Dutch oil major, which is battling to deal with a steep slump in oil prices over the last 19 months while absorbing BG Group, its biggest acquisition ever.
Mr. Odum is exiting Shell after a career of more than 30 years. He joined as an engineer in 1982 and worked his way up to become a member of the executive committee in 2009. As head of Shell’s exploration and production business in the Americas, he oversaw the company’s disastrous and costly quest for Arctic oil and took on his most recent role as head of unconventional resources just a month and a half ago.
“We’ve been in a mode of continually globalizing our various business lines,” Mr. Odum said in an interview in Houston. “Now that we’re on the heels of the BG acquisition, this is just a great time” to change the structure.
Mr. Odum said he was stepping away because it is a “good time” for him on a personal level. He declined to disclose any immediate plans.
Shell is aiming for the BG deal, which closed earlier this month, to refocus the company on massive positions in deep water oil projects and liquefied natural gas markets. The company is planning on selling off $30 billion worth of assets as part of the consolidation process.
Shunting its remaining unconventional interests into core business divisions will help “simplify Shell’s structure,” the company said in a news release. The business already has shrunk significantly over the last year, after Shell abandoned its push to explore for oil in the Alaskan Arctic and scrapped its Carmon Creek oil sands project in Canada. Shell has also postponed a decision on a giant LNG project in Canada.
RBC Capital Markets analysts welcomed the move, writing in a note that it suggests Shell’s troubled unconventional business will be lower priority in following its takeover of BG. “Shell is making the tough choices required to transition into the new entity,” the note said.
The changes at the company shouldn’t be seen as a step away from shale drilling, where Shell “has built a very strong portfolio here,” Odum said in the interview.
Shell Chief Executive Ben van Beurden praised Mr. Odum for the “central role he’s played in the company’s success,” in a news release. Mr. van Beurden was scheduled to speak at a major energy conference in Houston this week but has canceled public appearances due to illness. In the news release, he said the company’s American businesses are “well positioned for the next phase of their development.”
Bruce Culpepper, a human resources executive at Shell, will take on Mr. Odum’s role as U.S. country chairman.
By Sarah Kent
Source: Wall Street Journal
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