Global energy company,
Royal Dutch Shell plc
) has postponed its Arctic drilling plans for a year after a spill
containment dome sustained damage during the course of a testing
session. The company will carry out preliminary work this year and
will drill for oil next year.
The containment dome, which should have been in place before drills
could enter oil bearing rocks in the Chukchi and Beaufort seas, was
smashed. But the company remains positive about future prospects of
As of now, Shell would drill 1,400 feet below the seafloor and
close the hole to resume drilling in 2013. The company has already
spent $5 billion and was hoping to complete the drilling of five
Alaska wells this year in both the Chukchi and Beaufort seas.
The company has two drilling ships and more than twenty supporting
vessels, which were built for that area. As per federal reports,
the U.S. Arctic waters contain an estimated 26 billion barrels of
oil and 130 trillion cubic feet of natural gas. Shell expects to
tap this huge resource.
Royal Dutch Shell plc owns one of the largest integrated oil and
gas businesses in the world. The group has operations all over the
world and is involved in 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.
We believe that Shell's strong and diversified portfolio of
development projects offer lucrative long-term opportunities to the
company and will continue to boost revenue and earnings growth over
the next few quarters.
However, the company is particularly susceptible to its high
exposure to the downstream business, its major natural gas focus,
as well as lofty capital spending, which may result in reduced
returns going forward.
Royal Dutch Shell - Europe's most valued oil company, ahead of
) currently retains a Zacks #3 Rank that translates into a
short-term Hold rating. We are also maintaining our long-term
Neutral recommendation on the stock.
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