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Shell (RDS.A) to Divest Mobile Refinery to Vertex for $75M

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Royal Dutch Shell’s (RDS.A - Free Report) subsidiaries have reached an agreement to divest its Mobile Chemical LP Refinery to Texas-based high-quality refined goods producer and marketer Vertex Energy (VTNR - Free Report) .

The sale of the Mobile refinery and the accompanying co-located logistical infrastructure comprising product racks, a related port and the Blakeley Island Terminal is also included in the deal.

The contract is considered at $75 million, which includes cash as well as the value of hydrocarbon inventory. The transaction is planned to close in the fourth quarter of this year upon fulfilling all the necessary conditions and pending approvals.

Post completion of the deal, Mobile Refinery personnel who contributed significantly to the plant over the years will be offered to work under Vertex Energy, guaranteeing operational reliability and safety.

The crude oil capacity of the Mobile Refinery is 90,000 barrels per day. The facility is located along the United States Gulf Coast at the north end of Mobile Bay in Alabama. It produces LPG, diesel fuel, jet fuel and gasoline among other things. It may operate independently as a refinery, producing basic oils or chemicals feedstock.

The Mobile Refinery pact materializes only a week after Shell unit Shell Oil Company announced the sale of its 50% stake in the Deer Park Refining Limited Partnership to Mexico’s state oil monopoly Pemex. Notably, Texas-based Deer Park Refinery is a joint venture, equally shared between Shell Oil Company and P.M.I. Norteamerica, S.A. De C.V., an arm of Pemex.

The base price of the deal is $596 million, which includes cash and debt as well as the value of hydrocarbon inventory. The transaction is slated to conclude in the fourth quarter of 2021, contingent on customary conditions.

The above-mentioned divestitures signify Shell’s receding refinery footprint as part of a larger effort by oil giants to minimize their hydrocarbon emissions and adapt to lower-carbon fuels. This will turn them into high-value energy and chemical parks, thus allowing production of additional low-carbon fuels.

Zacks Rank & Key Picks

Shell has a Zacks Rank #3 (Hold), currently.  Some better-ranked players in the energy  space are Matador Resources Company (MTDR - Free Report) and Continental Resources, Inc. (CLR - Free Report) , each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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