Integrated energy giant,
Royal Dutch Shell plc
) along with consortium of oil producing firms, has entered into
a 35-year production sharing agreement (PSA). The other companies
include Brazilian state-run energy giant,
Petroleo Brasileiro SA
), Chinese offshore giant
) and state-owned China National Petroleum Company ("CNPC"). The
companies are expected to ink the contract by Nov 2013.
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Per the deal, the five firms will start drilling the offshore
Brazil-based Libra deepwater field, one of the largest oilfields
in the world. Royal Dutch Shell expects the minimum work plan of
the project to be completed by the end of 2017.
Agencia Nacional do Petroleo (ANP), a governmental regulatory
body of Brazil, estimates roughly 8 to 12 billion barrels of oil
in the recoverable resources of the Libra pre-salt oil field.
Moreover, the field might produce roughly 1.4 million barrels of
oil per day during peak production, subject to some appraisal
Petrobras, as an operator of the development, will own a 40%
ownership in the consortium. Also, Royal Dutch Shell will acquire
a 20% stake in the development for $280 million. Of the rest,
TOTAL will hold 20%, while CNOOC and CNPC will have 10% each.
Royal Dutch Shell's worldwide operations involve various
activities related to oil and natural gas, chemicals, power
generation, renewable energy resources, and other energy related
businesses. Royal Dutch Shell divides its operations into three
major segments: Upstream, Downstream, and Corporate.
In terms of assets, Royal Dutch Shell owns a strong and
diversified portfolio of global energy businesses that offer
attractive growth opportunities.
However, Royal Dutch Shell's relatively heavy downstream exposure
leaves it less diversified than its integrated peers. As such,
the group's results remain greatly exposed to refining/marketing
Royal Dutch Shell currently retains a Zacks Rank #3 (Hold),
implying that it is expected to perform in line with the broader
U.S. equity market over the next 1 to 3 months.