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SHEL Should Have Exited Dutch Gas Project Earlier Per CEO
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Shell’s (SHEL - Free Report) chief executive Ben van Beurden recently told a Dutch parliamentary panel examining natural gas production complications at the Groningen gas field that the London-based energy supermajor should have pulled out of the project much earlier, per a Reuters report.
Located in the Groningen province in the northeastern part of the Netherlands, the field was discovered in 1959 and run by Shell and ExxonMobil’s (XOM - Free Report) joint venture NAM. However, the field’s output was cut back sharply more than a decade ago after the earthquakes in the area, which happened in the late 1980s, were officially linked to gas extraction from the supergiant gas field.
Van Beurden mentioned “we had to continually ask what makes sense," as production at Groningen was at a level where the venture made little to no profit. "What made sense for Shell was to quit. In any other country, we would have stopped this operation. But in the Netherlands that was impossible because the Netherlands was dependent on Groningen gas," he added.
The Dutch government led by Prime Minister Mark Rutte has now capped Groningen production at 2.8 billion cubic meters (bcm) in the year commencing Oct 1. This is approximately 7% of the country’s annual domestic consumption compared with 42.5 bcm in 2014.
Moreover, due to energy supply shortages and gas prices rising significantly following Moscow’s military action in Ukraine and its aftermath, Rutte mentioned that production at the field could only be augmented again if households face a physical shortage.
Headquartered in London, Shell is one of the primary oil supermajors, a group of U.S. and Europe-based big energy multinationals with worldwide operations. The company is fully integrated as it is involved in all aspects of energy, from oil production to refining and selling.
Image: Bigstock
SHEL Should Have Exited Dutch Gas Project Earlier Per CEO
Shell’s (SHEL - Free Report) chief executive Ben van Beurden recently told a Dutch parliamentary panel examining natural gas production complications at the Groningen gas field that the London-based energy supermajor should have pulled out of the project much earlier, per a Reuters report.
Located in the Groningen province in the northeastern part of the Netherlands, the field was discovered in 1959 and run by Shell and ExxonMobil’s (XOM - Free Report) joint venture NAM. However, the field’s output was cut back sharply more than a decade ago after the earthquakes in the area, which happened in the late 1980s, were officially linked to gas extraction from the supergiant gas field.
Van Beurden mentioned “we had to continually ask what makes sense," as production at Groningen was at a level where the venture made little to no profit. "What made sense for Shell was to quit. In any other country, we would have stopped this operation. But in the Netherlands that was impossible because the Netherlands was dependent on Groningen gas," he added.
The Dutch government led by Prime Minister Mark Rutte has now capped Groningen production at 2.8 billion cubic meters (bcm) in the year commencing Oct 1. This is approximately 7% of the country’s annual domestic consumption compared with 42.5 bcm in 2014.
Moreover, due to energy supply shortages and gas prices rising significantly following Moscow’s military action in Ukraine and its aftermath, Rutte mentioned that production at the field could only be augmented again if households face a physical shortage.
Headquartered in London, Shell is one of the primary oil supermajors, a group of U.S. and Europe-based big energy multinationals with worldwide operations. The company is fully integrated as it is involved in all aspects of energy, from oil production to refining and selling.
Shell currently sports a Zacks Rank #1 (Strong Buy). Investors interested in the energy space might also look at some other similar-ranked stocks — Exxon Mobil, Murphy USA (MUSA - Free Report) and PBF Energy (PBF - Free Report) . You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Exxon Mobil’s 2022 earnings is pegged at $13.14 per share, up about 144.2% from the year-ago earnings of $5.38.
XOM beat the consensus mark for earnings in three of the trailing four quarters, the average being around 1.5%.
Estimates for Murphy USA’s 2022 EPS have been revised upward by about 14% over the past 60 days from $21.39 to $24.38.
MUSA beat the Zacks Consensus Estimate for earnings in all the trailing four quarters, the average being 49%.
The Zacks Consensus Estimate for PBF Energy’s 2022 earnings stands at $21.38 per share, up about 955.2% from the year-ago loss of $2.50.
PBF beat the consensus mark for earnings in all the trailing four quarters, the average being around 78%.