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Shell (RDS.A) to Vend West Qurna 1, Majnoon Oil Field Stakes

Zacks Equity Research

Moving forward with its $30-billion divestment goal, Royal Dutch Shell plc RDS.A is set to offload West Qurna 1 oil field in Iraq to Japan's Itochu Corporation. However, the value of the transaction has been kept under wraps. 

The company also intends to close the divestment of its interest in the Majnoon oil field in Iraq to the state-run Basra Oil Company by June 2018. Production in the Majnoon oil field started in 2014, with average capacity of 210,000 barrels per day.It is to be noted, Shell has a 45% operating stake in the Majnoon oil field. Malaysian national petroleum company, Petronas and Iraq’s Missan Oil Company have 30% and 25% stakes in the field, respectively.The primary reason behind Shell leaving Majnoon is that the oil department of the country and the company could not agree on the future production plans and investments for the field.

The divestment is in line with Shell's strategy to steer clear of debt stemming from its $50-billion acquisition of BG Group. The move will also help the company to upgrade and streamline its portfolio.

Notably, the company has already vended more than $23-billion assets as part of $30-billion 2016-2018 divestment plan. Additionally, Shell intends to divest more than $10 billion worth of assets in the 2019-2020 time period. We remind investors that as of Sep 30, 2017, Shell had around $80-billion long-term debt.  Its debt-to-capital ratio was 25.4%, which the company intends to reduce to 20% with the help of its divestment programs and operational efficiency.

Headquartered in Netherlands, Shell is one of the largest integrated energy companies engaged in production, refining, distribution and marketing of oil and natural gas. Shares of Shell have rallied 27.7% over a year compared with 13.6% growth of its industry. The company currently carries a Zacks Rank #2 (Buy).

 

Few other top-ranked players in the energy space are ConocoPhillips COP, Denbury Resources Inc. DNR and Cabot Oil & Gas Corporation COG. All three companies sport a Zacks rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ConocoPhillips delivered an average positive earnings surprise of 152.34% in the trailing four quarters.

Denbury Resources delivered an average positive earnings surprise of 125% in the trailing four quarters.

Cabot is expected to witness year-over-year growth of 101% in its earnings in 2018.

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Royal Dutch Shell PLC (RDS.A) : Free Stock Analysis Report
 
Cabot Oil & Gas Corporation (COG) : Free Stock Analysis Report
 
Denbury Resources Inc. (DNR) : Free Stock Analysis Report
 
ConocoPhillips (COP) : Free Stock Analysis Report
 
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