Shell's (SHEL) Subsidiary Announces FID for Sparta Development
Shell plc’s SHEL subsidiary, Shell Offshore Inc., officially declared the Final Investment Decision (FID) for Sparta, a deep-water development project in the U.S. Gulf of Mexico.
Sparta, jointly owned by Shell Offshore Inc. (51% operator) and Equinor Gulf of Mexico LLC (49%), is poised to achieve a peak production of approximately 90,000 barrels of oil equivalent per day (boe/d). The project currently boasts an estimated discovered recoverable resource volume of 244 million boe. It's important to note that the estimated peak production and the current estimated recoverable resources are presented as 100% total gross figures.
Sparta will be Shell's 15th deep-water host in the Gulf of Mexico and is scheduled to commence production in 2028. The project's design is rooted in Shell's cost-effective development approach, emphasizing standardized and simplified host designs.
Zoë Yujnovich, Shell's Integrated Gas & Upstream director, highlighted the significance of this deep-water development, stating that the company’s latest deep-water development demonstrates the power of replication, driving greater value from its advantageous position. She added that the FID is aligned with SHEL’s commitment to pursue the most energy-efficient and competitive projects while supplying safe, secure energy today and for decades to come.
Built on more than four decades of deep-water expertise, Sparta represents a milestone as Shell's inaugural development in the Gulf of Mexico, designed to produce oil and associated gas from reservoirs with pressures reaching up to 20,000 pounds per square inch.
The Sparta development spans across four Outer Continental Shelf blocks in the Garden Banks area of the U.S. Gulf of Mexico. It will feature a semi-submersible production host in water depths exceeding 1,400m/4,700ft, initially equipped with eight oil and gas producing wells.
Sparta's design closely mirrors the successful Vito and Whale designs, both four-column semi-submersible host facilities. It is an enhanced replica of Whale, imitating about 95% of Whale's hull and 85% of its topsides. Vito, located in the greater Mars Corridor, commenced production in February 2023, while Whale, set to be located in the Perdido corridor, is scheduled to come online in 2024.
Zacks Rank & Key Picks
Shell currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the energy sector are The Williams Companies, Inc. WMB, Sunoco LP SUN and EOG Resources, Inc. EOG. While both The Williams Companies and Sunoco sport a Zacks Rank #1 (Strong Buy), EOG Resources carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Williams Companies is well-positioned to capitalize on the anticipated substantial long-term growth in U.S. natural gas demand, thanks to its impressive portfolio of large-scale projects that create significant value. The company’s debt maturity profile is in good shape with its $4.5-billion revolver maturing in fiscal 2023.
WMB’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 13.68%.
Sunoco is among the biggest motor fuel distributors in the U.S. wholesale market in terms of volumes. By distributing more than 10 fuel brands via 10,000 convenience stores under long-term distribution contracts, the partnership will continue to generate stable cash flow.
SUN’s earnings beat estimates in two of the trailing four quarters and missed twice, delivering an average surprise of 28.33%.
EOG Resources is an energy exploration and production company with an attractive growth profile, upper-quartile returns and a disciplined management team. With highly productive acreages in premier oil shale plays like the Permian and Eagle Ford, the company has numerous untapped high-quality drilling sites.
EOG’s earnings beat estimates in three of the trailing four quarters and missed once, delivering an average surprise of 9.17%.
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