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Shell (RDS.A) Signs MoU to Explore Green Hydrogen Opportunities

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  • NG=F
  • CL=F
  • RDS-A
  • CPE
  • NHYDY
  • SM
  • FANG

Royal Dutch Shell plc (RDS.A) signed a memorandum of understanding (MoU) with Norsk Hydro to explore opportunities to produce green hydrogen from renewable electricity.

The move came as part of the companies' plans to decarbonize their operations, and supply heavy industries and transport customers. Green hydrogen is produced by electrolysis, using renewable power to split water into hydrogen and oxygen. Notably, the low-carbon gas is known to decarbonize emission-intensive industry and transport sectors, which are dependent on fossil fuels.

Per the MoU, Shell and Norsk Hydro will produce and supply green hydrogen in hubs focused around their businesses. The companies will also seek to identify opportunities for producing and supplying renewable hydrogen to the broader market from Europe-based locations, aiming to expand into other locations over time.

With green hydrogen, Norsk Hydro could further reduce the footprint of its low-carbon aluminum as its production is highly energy-intensive. Using renewable hydrogen for heating purposes in aluminum production will help Norsk Hydro progress toward its global commitment of reducing carbon emissions by 30% by 2030.

Green hydrogen can be produced in locations where both parties have relatively high gas consumption and opportunities to deliver to a third-party market, such as refineries or other process industries, which already use hydrogen.

Hydrogen is crucial to make faster progress toward a net-zero emission future. Shell and Norsk Hydro aim to establish integrated hydrogen value chains and a strong global market for green hydrogen by utilizing their strengths and capabilities. The companies will spend the coming nine months exploring the opportunities for the partnership.

Company Profile & Price Performance

Shell is one of the primary oil majors — a group of big energy multinationals based in the United States and Europe. The company is fully integrated, as it participates in every aspect related to energy, from oil production to refining and marketing.

Shares of the company have outperformed the industry in the past six months. The stock has gained 15.8% compared with the industry's 14.1% growth.

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Zacks Investment Research

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Zacks Rank & Stocks to Consider

Shell currently carries a Zack Rank #3 (Hold).

Some better-ranked players in the energy space are Diamondback Energy, Inc. FANG and Callon Petroleum Company CPE, each sporting a Zacks Rank #1 (Strong Buy), and SM Energy Company SM, carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Midland, TX-based Diamondback is an independent oil and gas exploration and production company, with its primary focus on the Permian Basin. The upstream operator focuses on growth through a combination of acquisitions and active drilling in America's hottest and lowest-cost shale region.

In the past year, shares of Diamondback have gained 229.4% compared with Zacks Exploration and Production Industry's growth of 154.8%. Moreover, FANG's earnings for 2021 are expected to surge 60.9% year over year. The company has witnessed 10 upward revisions in the past 30 days.

Houston, TX-based Callon Petroleum primarily focuses on the exploration, and production of oil and gas resources in the oil-rich Permian Basin. Among the major sub-basins of Permian, the highest-producing shale play in the United States, the company has a strong footprint in theMidland andDelawarebasins.

Shares of Callon Petroleum have gained 864.5% in the past year compared with the industry's growth of 154.8%. CPE's earnings for 2021 are expected to rise 56.6% year over year. The company has witnessed five upward revisions in the past 30 days.

Denver, CO-based SM Energy is one of the most attractive players in the exploration and production space. It engages in the exploration, exploitation, development, acquisition and production of crude oil and natural gas in North America. SM's operations focus on the Permian Basin region, and the South Texas and Gulf Coast regions.

In the past year, shares of SM Energy have gained 1384.5% compared with the industry's growth of 154.8%. In the past 60 days, the Zacks Consensus Estimate for SM's 2021 earnings has been raised by 756.3%. It is also projected to see a year-over-year earnings surge of 293.7% in 2021.


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Royal Dutch Shell PLC (RDS.A) : Free Stock Analysis Report

SM Energy Company (SM) : Free Stock Analysis Report

Diamondback Energy, Inc. (FANG) : Free Stock Analysis Report

Callon Petroleum Company (CPE) : Free Stock Analysis Report

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