Integrated energy giant,
Royal Dutch Shell plc
), plans to sell its Eagle Ford properties in south Texas,
following the announcement of a $2 billion write-down of its
North American assets in August. The company's second-quarter
results reported a drop in profits primarily due to the
Shell plans to sell the leases it holds across 106,000 acres
in the shale play. The company will allow interested buyers to
evaluate the technical information on the assets while it
continues to work on the 150 producing wells. However, Shell has
been unable to reap the benefits from its holding in the
oil-gas-rich play. This is because Shell entered the market only
in 2010 when the price of natural gas was already in a downtrend,
thereby rendering the economics less profitable.
On the other hand, companies like
Exxon Mobil Corporation
Marathon Oil Corporation
) have benefited significantly from their share in the play.
Shell believes that its move to exit the shale play offers a good
growth opportunity to other operators.
The company also plans to divest the 600,000 acres it holds in
Mississippi Lime formation in Kansas with the objective of
investing the proceeds in other areas.
Shell stock trades in a 52-week range of $62.65 to $73.00.
Following the announcement, stocks fell marginally (0.3%),
settling at $65.68 on Sep 30.
Shell owns one of the largest oil and gas businesses in the
world. The group is involved in various activities related to oil
and natural gas, chemicals, power generation, renewable energy
resources and other energy related businesses. Shell divides its
operations into three major segments, Upstream, Downstream and
Royal Dutch Shell currently retains a Zacks Rank #4 (Sell),
implying that it is expected to underperform the broader U.S.
equity market over the next 1 to 3 months. Among the other
companies mentioned above, Marathon and Exxon Mobil hold a Zacks
Rank #3 (Hold), whereas ConocoPhillips has a Zacks Rank #2 (Buy).
CONOCOPHILLIPS (COP): Free Stock Analysis
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