Integrated energy major, Royal Dutch Shell plc (RDS.A - Free Report) and two other companies recently purchased around 1 million barrels of Nigeria’s Forcados crude grade. The oil is slated to be delivered in late November. Per Bloomberg, this is a clear indication that the Forcados oil pipeline in Nigeria will soon start deliveries for the first time since February.
Shell, which is the operator of the Forcados terminal, bought 1 million barrels of crude along with Axion Energy Argentina SA and Pampa Energia SA for delivery to Argentine refineries in the last week of November.
In Feb 2016, The Trans Forcados pipeline was attacked by militants. This terror attack compelled Shell’s subsidiary – Shell Petroleum Development Corporation – to declare force majeure. This allowed the company to stop shipments without breaching existing contracts. Notably, this pipeline exported about 200,000 barrels of oil per day with an ability to export around 400,000 barrels per day if operated at full capacity.
In a separate development, Shell recently shut down its Trans Niger Pipeline at Gio in Ogoni due to a fire outbreak. This pipeline feeds into Nigeria's strategic Bonny Export Terminal.
The shutdown is expected to lower Shell’s Nigerian exports by 180,000 barrels per day. Shell Petroleum Development has shut down the pipeline as a precautionary measure to determine the cause and impact of the fire.
ROYAL DTCH SH-A Price
Headquartered in The Hague, the Netherlands, Shell is one of the largest integrated oil and gas companies in the world. It explores for and extracts crude oil, natural gas and natural gas liquids. It has interests in chemicals as well as power generation and renewable energy.
As anticipated, the commodity price slump has adversely affected Shell’s financials, particularly its upstream unit. Furthermore, Shell’s revenues, earnings and cash flow have been significantly hurt by weak natural gas prices. Attacks on the company’s local establishments by the Nigerian militants have added to its woes.
Shell currently carries a Zacks Rank #5 (Hold), implying that it will underperform the broader U.S. equity market over the next one to three months.
Some better-ranked players in the broader energy sector include Evolution Petroleum Corp. (EPM - Free Report) and China Petroleum & Chemical Corp. (SNP - Free Report) . Both these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the last four quarters, Evolution Petroleum posted an average positive earnings surprise of 45.8%.
China Petroleum & Chemical, on the other hand, posted an average positive earnings surprise of 1,383.3% in the last four quarters.
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