Integrated energy major Royal Dutch Shell plc (RDS.A - Free Report) recently announced its plan to invest $10 billion in Brazil over a span of five years. The company intends to tap into the increased opportunities for foreign companies in the Brazilian oil industry with this move.
Shell – the largest foreign investor in Brazil – plans to continue investing heavily in the country in order to double its global deep water production by the early 2020s. Shell plans to invest around $2 billion every year and it intends to fund the investment from the more than $30 billion in capital that it has already deployed in Brazil.
Following regulatory changes in Brazil, Shell seeks to expand its ultra deepwater oil exploration and production holdings in the country. Notably, the company already operates 5,500 energy stations in the nation and has acquired a large number of oil and gas assets via its takeover of BG Group this year.
In 2016, Shell became the biggest private sector partner in giant deepwater offshore field discoveries through its $50 billion acquisition of BG Group. After an investment of $10 billion, production from the company’s deepwater portfolio is expected to rise from about 450,000 barrels per day to 900,000 barrels per day. This in turn, will increase Brazil’s share of the company’s production from a fraction in 2015 to roughly halfover the next decade.
Headquartered in 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.
Shell currently carries a Zacks Rank #2 (Buy), which implies that the stock will outperform the broader U.S. equity market over the next one to three months.
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Other well-ranked players from the broader energy sector include Braskem S.A. (BAK - Free Report) , Ultra Petroleum Corp. (UPLMQ - Free Report) and McDermott International Inc. (MDR - Free Report) . All 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, Braskem posted an average positive earnings surprise of 105.5%.
Ultra Petroleum, on the other hand, posted an average positive earnings surprise of 65.91% in the last four quarters.
In the last four quarters, McDermott posted an average positive earnings surprise of 250.00%.
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