Shell's (SHEL) Unit to Take Over Rest of Shell Midstream

Shell Pipeline Company, a unit of oil major Shell plc SHEL, announced that it made an offer to buy all the remaining common units of Shell Midstream Partners SHLX —its pipeline affiliate —for about $12.89 apiece, which is equal to Shell Midstream’s closing price on Feb 10. The total cash consideration for this deal is about $1.6 billion.

Shell and its affiliates, who already own 68.5% of SHLX common units, said that the planned deal will streamline the governance of Shell Midstream’s assets, help in cost reduction and provide elasticity to improve the pipeline portfolio.

However, the buyout is subject to quite a few contingencies, including the consent from Shell Midstream’s board and negotiations around the definitive agreement.

Headquartered in London, Shell is one of the primary oil supermajors, a group of U.S. and Europe-based big energy multinationals with operations spanning worldwide. The company is fully integrated as it participates in every aspect related to energy from oil production to refining and marketing. SHEL operates as an energy and petrochemical company. Shell plc was formerly known as Royal Dutch Shell.

Shell Midstream Partners, L.P. engages in owning, operating, developing and acquiring pipelines and other midstream assets. Its initial assets consist of interests in entities, which own crude oil and refined products pipelines, serving as the key infrastructure to transport growing onshore and offshore crude oil production to Gulf Coast refining markets and to deliver refined products from those markets to major demand centers. Shell Midstream Partners, L.P. is based in Houston, TX.

Shell currently holds a Zacks Rank #2 (Buy). Apart from Shell, investors interested in the energy space might look at the following companies.  Ranger Oil ROCC and ExxonMobil XOM each sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ranger Oil’s stock has increased 146.2% in a year. The Zacks Consensus Estimate for Ranger Oil’s 2022 earnings is projected at $9.29 per share, which is an increase of a massive 162.3% from the projected year-ago earnings of $3.54.

ROCC beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, the average being around 25%.

ExxonMobil beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being around 5.8%. ExxonMobil stock has increased around 56.1% in a year.

The Zacks Consensus Estimate for ExxonMobil’s 2022 earnings has been revised upward by about 16.3% over the past 60 days from $5.89 to $6.85 per share. XOM is valued at around $340 billion.

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