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Will Groningen Field's Gas Phasing Out Hit Shell & Exxon?
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The government of Netherlands recently said that gas production from the Groningen field, once biggest in the continent, will be gradually phased out by 2030 to lower the risk and damages from the earthquakes caused by drilling. Nederlandse Aardolie Maatschappij BV or NAM, a joint venture between Royal Dutch Shell PLC and Exxon Mobil Corporation (XOM - Free Report) is the operator in the field.
For the last few years, production cap in the field increased, reducing output from 53.8 billion cubic meters (bcm) in 2013 to its current-year target of 21.6 bcm. The government wants to reduce production from the field to 12 bcm in the next four to five years. The production decline being gradual is expected to help the local industrial natural gas users, giving them time to look for other energy sources.
To ease the transition, the government intends to build a new $616.6 million (€500 million) nitrogen plant that will convert imported gas for everyday use. The decision is also expected to affect Dutch exports. Notably, 30% gas production of the European Union comes from Netherlands.
Each year, the region witnesses earthquakes triggered by gas extraction that damage many properties. The situation led the government to the decision of slowly ending production from the field, located in the northeastern part of the Netherlands. A lawsuit pursued by 3,500 victims, states that around 100,000 houses in the area have lost €1 billion in total due to seismic activities in the field.
Both Shell and Exxon Mobil — with Zacks Rank #3 (Hold) — have number of energy assets in the continent. Therefore, the gradual decline in production from the Groningen field is not expected to be a headache for the oil majors in the long run. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price Performance
Shell’s stock has gained 20.9% in the last year, while Exxon Mobil witnessed 8.9% fall, versus 7.8% rise of the industry they belong to.
If you are interested in the oil and energy sector, you may consider a few better-ranked stocks like Pioneer Natural Resources Company and Continental Resources, Inc. , each sporting a Zacks Rank #1 (Strong Buy).
Irving, TX-based Pioneer Natural is an independent oil and gas exploration and production company. Its revenues for first-quarter 2018 are anticipated to improve 23.7% from the prior-year quarter. The company witnessed an average positive earnings surprise of 66.9% in the trailing four quarters.
Oklahoma City, OK-based Continental Resources is an oil and gas exploration and production company. Its revenues for first-quarter 2018 are estimated to soar 54.9% from the year-ago quarter’s figure. For 2018, the bottom line is likely to be up 366.7%.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Will Groningen Field's Gas Phasing Out Hit Shell & Exxon?
The government of Netherlands recently said that gas production from the Groningen field, once biggest in the continent, will be gradually phased out by 2030 to lower the risk and damages from the earthquakes caused by drilling. Nederlandse Aardolie Maatschappij BV or NAM, a joint venture between Royal Dutch Shell PLC and Exxon Mobil Corporation (XOM - Free Report) is the operator in the field.
For the last few years, production cap in the field increased, reducing output from 53.8 billion cubic meters (bcm) in 2013 to its current-year target of 21.6 bcm. The government wants to reduce production from the field to 12 bcm in the next four to five years. The production decline being gradual is expected to help the local industrial natural gas users, giving them time to look for other energy sources.
To ease the transition, the government intends to build a new $616.6 million (€500 million) nitrogen plant that will convert imported gas for everyday use. The decision is also expected to affect Dutch exports. Notably, 30% gas production of the European Union comes from Netherlands.
Each year, the region witnesses earthquakes triggered by gas extraction that damage many properties. The situation led the government to the decision of slowly ending production from the field, located in the northeastern part of the Netherlands. A lawsuit pursued by 3,500 victims, states that around 100,000 houses in the area have lost €1 billion in total due to seismic activities in the field.
Both Shell and Exxon Mobil — with Zacks Rank #3 (Hold) — have number of energy assets in the continent. Therefore, the gradual decline in production from the Groningen field is not expected to be a headache for the oil majors in the long run. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price Performance
Shell’s stock has gained 20.9% in the last year, while Exxon Mobil witnessed 8.9% fall, versus 7.8% rise of the industry they belong to.
If you are interested in the oil and energy sector, you may consider a few better-ranked stocks like Pioneer Natural Resources Company and Continental Resources, Inc. , each sporting a Zacks Rank #1 (Strong Buy).
Irving, TX-based Pioneer Natural is an independent oil and gas exploration and production company. Its revenues for first-quarter 2018 are anticipated to improve 23.7% from the prior-year quarter. The company witnessed an average positive earnings surprise of 66.9% in the trailing four quarters.
Oklahoma City, OK-based Continental Resources is an oil and gas exploration and production company. Its revenues for first-quarter 2018 are estimated to soar 54.9% from the year-ago quarter’s figure. For 2018, the bottom line is likely to be up 366.7%.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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