Shell (RDS.A) to Acquire BP's 27.5% Stake in the Shearwater Hub
Royal Dutch Shell plc. RDS.A recently announced its intention to buy BP p.l.c.’s BP 27.5% interest in the Shearwater gas and condensate hub, thus increasing its holding to 55.5%. The Anglo-Dutch firm is also purchasing a 12.176% stake in BP's Shearwater Elgin Area Line (Seal) and Seal Interconnector Link pipelines. The deal is contingent on regulatory approvals.
This decision highlights Shell's objective of concentrating its upstream operations on fewer, existing holdings to create substantial returns for shareholders and fund the company's transition to a carbon-neutral enterprise.
Notably, in May this year, BP was in talks to divest its stake in the Shearwater field to Tailwind Energy, a privately-held oil and gas company, per Bloomberg. The potential acquirer had Mercuria Energy Group as equity partner. The deal, however, fell through.
Last year, BP also agreed to divest its Shearwater and Andrew projects to Premier Oil for $625 million, which didn’t materialize either. Instead, Premier Oil was merged with Chrysaor Holdings with the combined entity named as Harbour Energy plc.
The Shearwater project is operated by Shell and located in the U.K. North Sea. The field produces 18,000 barrels of oil equivalent per day. The other main partner at Shearwater is Exxon Mobil Corporation XOM, which currently owns 44.5% of Shearwater but is in the process of selling off its interests in the field to NEO Energy. The move is part of ExxonMobil’s plan to get rid of less strategic assets and free up capital to focus more on its profitable resources like those in Guyana, Brazil and the Permian Basin in the United States.
About Shell
Shell is one of the primary oil majors, which constitutes a group of U.S. and Europe-based energy giants with global operations. The company is fully integrated as it participates in every aspect related to energy from oil production to refining and marketing.
Zacks Rank & Key Pick
Shell currently has a Zacks Rank #3 (Hold). A better-ranked player in the energy space is PetroChina Company Limited PTR, presently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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