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Shell Junks Westward Ho Project on Waning Shipper Interest

Energy major Royal Dutch Shell plcRDS.A has decided to call off its Westward Ho pipeline project which would have transported crude oil from St. James, LA to Houston.

The pipeline was anticipated to start operating this year with its peak capacity being 900,000 barrels each day. However, waning shipper interest in the pipeline owing to challenging business conditions has compelled Shell to scrap the project.

Another reason behind the energy major's exit from the planned project is that other pipelines have already started transporting significant amounts of crude to the Houston area.

U.K-based Shell is one of the largest integrated energy firms in the world with a strong and diversified portfolio of development projects that offer attractive long-term opportunities. The company's decision to acquire BG Group, U.K.'s third largest energy player, for $70 billion, is a major positive. Moreover, the company reported impressive second-quarter 2015 financial results in spite of an unfavorable business environment.

However, with crude prices remaining low, Shell's upstream division is likely to extract less value for its products. Additionally, Shell's ADRs are expected to remain soft due to its major natural gas focus and lofty capital spending.

As a result, the company carries a Zacks Rank #3 (Hold), which implies that the stock will perform in line with the broader U.S. equity market over the next one to three months.

Meanwhile, better-ranked players in the energy sector include Seadrill Partners LLC SDLP , Alon USA Partners, LP ALDW and Halcón Resources Corporation HK . All the stocks sport a Zacks Rank #1 (Strong Buy).

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ROYAL DTCH SH-A (RDS.A): Free Stock Analysis Report

HALCON RESOURCS (HK): Free Stock Analysis Report

SEADRILL PTNRS (SDLP): Free Stock Analysis Report

ALON USA PTNRS (ALDW): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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