Integrated energy firm
Royal Dutch Shell plc
) has agreed to buy certain liquefied natural gas (LNG)
), based in Spain. The assets are located in Peru and Trinidad
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Royal Dutch Shell will pay roughly $6.2 billion for the
transaction, of which $4.4 billion will be provided in cash and
the remaining $1.8 billion will be assumed as balance sheet
liabilities. Included in the deal is Royal Dutch Shell's
commitment to provide roughly 0.1 million tons per annum (mtpa)
of LNG for 10 years, to Canada based Canaport LNG terminal of
The Repsol asset acquisition is expected to increase Royal Dutch
Shell's LNG volume by roughly 7.2 mtpa, while helping the group
to earn significant cash flows.
The acquisition is expected to close by the second half of 2013
or the first half of 2014, subject to regulatory approvals.
Based in Hague, the Netherlands, Royal Dutch Shell is an
exploration, production, refining, and marketing company with
operations and assets worldwide. The company divides its
operations into three major segments: Upstream, Downstream, and
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
margins. Shell's downstream operations have struggled recently
due to weak demand for fuel, leading to lower returns in this
Royal Dutch Shell currently carries a Zacks Rank #4 (Sell),
implying that it is expected to underperform the broader U.S.
equity market over the next one to three months.
In the energy sector,
Range Resources Corporation
) display better fundamentals and currently carry a Zacks Rank #2