Shell's (SHEL) North Sea Oil & Gas Volumes Double Predictions
Shell plc (SHEL) conducted a post-well analysis of a recent Pensacola North Sea discovery, revealing a considerable increase in the estimated oil and gas resources that are roughly twice the earlier forecasts, per a Deltic Energy Plc press release. Deltic Energy has a 30% working interest in the Shell-operated license of Pensacola natural gas discovery.
In November 2022, drilling operations at the Pensacola gas prospect began using the Maersk Resilient, a harsh environment jack-up rig that is now known as Noble Resilient. In January 2023, word spread that this well had discovered gas. Results of the flow test, which were made public in February 2023, fulfilled pre-test expectations based on reservoir data obtained from the well.
According to a statement made by Deltic Energy, the Pensacola structure is now believed to have material volumes of oil in addition to natural gas, with gross P50 initially in-place volumes of oil and gas totaling 342 million barrels of oil equivalent (boe). Deltic Energy projects a gross P50 EUR of roughly 99 million boe, up from 50 million boe immediately following well completion.
The discovered gas volumes in the northern part of the Pensacola prospect are better constrained and therefore likely to be the initial focus of near-term appraisal and development activity even though the expected presence of oil in the southern part of the prospect represents highly material upside.
The drilling of an appraisal well on Pensacola is slated for late 2024, subject to joint venture (JV) and other regulatory approvals. Shell and its JV partners are working on developing the appraisal program for the Pensacola find. In the meanwhile, the JV will conduct several studies to determine an optimal development strategy for the Pensacola discovery.
Zacks Rank & Key Picks
Shell is a group of U.S. and Europe-based big energy multinationals with operations across the world. Currently, Shell carries a Zack Rank #3 (Hold).
Some better-ranked stocks in the energy sector are Evolution Petroleum Corporation EPM, NGL Energy Partners LP NGL and Murphy USA MUSA. While Evolution Petroleum sports a Zacks Rank #1 (Strong Buy), both NGL Energy Partners and Murphy USA carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Evolution Petroleum is an independent energy company. It was formed to acquire and develop oil and gas fields and apply both conventional and specialized technology to accelerate production, particularly in low-permeability reservoirs. EPM has witnessed an upward earnings estimate revision for 2023 and 2024 in the past 60 days.
NGL Energy Partners, headquartered in Tulsa, OK, is a limited partnership operating a vertically-integrated propane business with three operating segments — retail propane, wholesale supply and marketing, and midstream. NGL has witnessed an upward earnings estimate revision for 2024 in the past 60 days.
Murphy USA operates stations close to Walmart supercenters and sells low-cost, high-volume fuel. This helps the company to get a lot more business than its competitors. Another significant competitive advantage for the firm is its access to product distribution centers and pipelines, which helps control costs in the intensely competitive retail sector. Over the past 30 days, MUSA has witnessed an upward earnings estimate revision for 2023 and 2024.
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