Shell to divest major Texas shale assets

  •   19/07/2021 - 13h53
  •   DEHOUI Lionel

The Shell Group recently entered into an agreement with a subsidiary of Udenna Corporation. The two companies signed the agreement through their respective subsidiaries Shell Petroleum N.V. and Malampaya Energie XP. The objective of the Dutch group is to sell the entirety of "Shell Philippines Exploration B.V." (SPEX) to its counterpart. After this transaction, Shell intends to divest important assets in Texas.

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Shell to divest major Texas shale assets

Possible divestment of Shell's Texas operations

The largest oil field in the United States is owned by Royal Dutch Shell. The company is examining these holdings as part of a possible asset sale.

At the same time, the group is facing increased pressure to work towards reducing its carbon emissions. It is a divestment transaction that could involve all or part of Shell's assets in Texas (Permian basin).

It is worth noting that in 2020, Shell's activities in this basin generated more than 6% of its total oil and gas production. The value of these holdings could be huge, even exceeding the $10 billion mark, i.e. 8.25 billion euros.

However, some sources see no certainty that the Anglo-Dutch company will sign a deal in this context. Shell did not wish to comment on the matter.

 

The objectives of this potential sale operation

Shell is currently the second largest energy company in the West. It is under pressure from its investors, like its rivals in the sector, to increase its profits by selling assets.

They are demanding that the company reduce its greenhouse gas emissions at the same time. These emissions are at the root of the acceleration of global warming.

On the other hand, it is clear that the Anglo-Dutch group's withdrawal from the Permian region would cause a lot of changes.

This area actually represents one of the 9 main basins included in its strategic energy transition plan after a recent investigation. Shell aims to be carbon neutral by 2050 according to its strategy.

In fact, Shell's energy transition strategy is undoubtedly one of the most ambitious in the industry. Its aim is to increase investment in renewable energy while gradually reducing oil and gas production.

 

The Hague puts pressure on Shell

Already in May, a court in The Hague (Netherlands) had demanded more greenhouse gas emission reductions from the group before 2030.

Shell does not intend to stop with this decision of the European court. The group is considering an appeal. However, it is more than determined to accelerate its reduction in greenhouse gas emissions.

This commitment could have a negative impact on its oil and gas activities. They could be reduced.

On the other hand, Shell's management is still working on the payment of the interim dividend for Q1/2021. This will be made in euros and pounds sterling following approval by its board of directors. The announcement about this payment dates back to April 29, 2021 and is for a dividend of US$0.173 5 per ordinary share (A or B).

With such news from the company, Shell shares were able to advance by 1.8% on the London Stock Exchange.