Shell (SHEL) to Merge Its Integrated Gas, Upstream Businesses

Shell plc (SHEL) has publicly stated that its integrated gas and upstream units will be merged into integrated gas and upstream businesses due to "turbulent markets," as the low-margin business has been struggling in Germany, the UK, and the Netherlands over the last year. As a result, European power and gas retailers have been put under pressure. Shell announced that Zoe Yujnovich, currently serving as an upstream director, will manage the new division.

A downstream and renewables directorate will be created, led by Huibert Vigeveno, the existing downstream director, by combining the downstream business with renewables and energy solutions. Shell's oil and gas production and liquefied natural gas (LNG) divisions will be combined under its new CEO, Wael Sawan. The new division will combine Shell's most profitable operations, according to Shell.

To "simplify the organisation further and increase performance," Shell plc will reduce the number of members on Shell's executive committee from nine to seven under the internal restructuring.

The modifications will go into effect on Jul 1. The company also mentioned that these changes will not affect its financial reporting segments — corporate, upstream, marketing, chemicals and products, renewables and energy solutions, and integrated gas.

Shell, whose strategy includes lowering greenhouse gas emissions and expanding its low-carbon business, ruled out large scale job losses due to the overhaul but cautioned about some “possible cuts.”

Zacks Rank and Key Picks

Shell is one of the primary oil supermajors, a group of U.S.- and Europe-based big energy multinationals with operations spanning worldwide. Currently, Shell carries a Zacks Rank #3 (Hold). Meanwhile, investors interested in the energy sector might look at stocks like Patterson-UTI Energy PTEN and Halliburton (HAL), both sporting a Zacks Rank #1 (Strong Buy), and Calumet Specialty Products Partners (CLMT), holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Patterson-UTI Energy: PTEN beat the Zacks Consensus Estimate for earnings in three of the last four quarters. The company has a trailing four-quarter earnings surprise of roughly 169.23%, on average.

Patterson-UTI is worth approximately $3.47 billion. Its shares have gained 63.4% in the past year.

Halliburton: Halliburton is valued at around $36.35 billion. In the past year, HP stock has increased by 33%.

TX-based Halliburton Company, headquartered in Houston, is one of the largest oilfield service providers in the world with a trailing four-quarter earnings surprise of roughly 5.87%, on average.

Calumet Specialty Products Partners: Calumet Specialty Products Partners is worth approximately $1.33 billion. Its shares have gained 19.5% in the past year.

Calumet Specialty Products Partners, L.P. is a leading independent producer of high-quality, specialty hydrocarbon products in North America.

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