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Shell (RDS.A) to Divest Australian Aviation Fuels Unit
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Integrated energy major Royal Dutch Shell plc recently announced that it has entered into an agreement to divest its aviation fuels business in Australia to Viva Energy Australia Pty. Ltd. for about US$250 million.
The transaction is expected to close by mid-2017. Post divestiture, however, the Australian business unit will continue to use the Shell brand and logo. Moreover, employees of Shell Aviation Australia will remain employed by the company after the deal.
Viva Energy, controlled by European energy trader Vitol Holdings B.V., is already involved in the sale process of Shell-branded fuels and lubricants in the country under an existing licensing arrangement. After the aforesaid transaction, the company will continue to supply Shell-branded fuel under existing contracts to its aviation customers.
In a separate discussion, Shell reported that it has sold its 31.2% stake in Showa Shell Sekiyu K.K. to Idemitsu Kosan Co. Ltd.The sale follows anti-trust approval from the Japan Fair Trade Commission and is worth US$1.4 billion. Post completion of the deal, Shell now retains 3.8% stake in the company.
The above-mentioned deals by Shell are in line with its $30 billion divestment initiative. Shell intends to offload assets worth as much as $30 billion by exiting operations in five to 10 countries. It has, however, made relatively slow progress in this regard as the oil price rout dampened buyer enthusiasm for deals at the prices Shell is targeting. In 2016, Shell sold or agreed to sell around $6 billion of assets.
Shell, which is headquartered in Hague, the Netherlands, 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.
The Anglo-Dutch group’s divestment plans are targeted to weather the more than two-year downturn in oil prices and to improve its financials post the BG Group acquisition.
Year to date, the Zacks categorized International Oil and Gas Integrated industry has registered an impressive growth of 21.6%. However, the Shell stock has outperformed the industry by gaining 24.6%.
Shell currently carries a Zacks Rank #3 ( Hold), which implies that the stock will perform in line with the broader U.S. equity market over the next one to three months.
Some better-ranked players from the broader energy sector include Braskem S.A. (BAK - Free Report) , Ocean Rig UDW LLC and McDermott International Inc. . Braskem and McDermott sport a Zacks Rank #1 (Strong Buy), whereas Ocean Rig carries a Zacks Rank #2 (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%.
Ocean Rig, on the other hand, delivered an average positive earnings surprise of 66.39% in the last four quarters.
In the last four quarters, McDermott posted an average positive earnings surprise of 250.00%.
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Shell (RDS.A) to Divest Australian Aviation Fuels Unit
Integrated energy major Royal Dutch Shell plc recently announced that it has entered into an agreement to divest its aviation fuels business in Australia to Viva Energy Australia Pty. Ltd. for about US$250 million.
The transaction is expected to close by mid-2017. Post divestiture, however, the Australian business unit will continue to use the Shell brand and logo. Moreover, employees of Shell Aviation Australia will remain employed by the company after the deal.
Viva Energy, controlled by European energy trader Vitol Holdings B.V., is already involved in the sale process of Shell-branded fuels and lubricants in the country under an existing licensing arrangement. After the aforesaid transaction, the company will continue to supply Shell-branded fuel under existing contracts to its aviation customers.
In a separate discussion, Shell reported that it has sold its 31.2% stake in Showa Shell Sekiyu K.K. to Idemitsu Kosan Co. Ltd.The sale follows anti-trust approval from the Japan Fair Trade Commission and is worth US$1.4 billion. Post completion of the deal, Shell now retains 3.8% stake in the company.
The above-mentioned deals by Shell are in line with its $30 billion divestment initiative. Shell intends to offload assets worth as much as $30 billion by exiting operations in five to 10 countries. It has, however, made relatively slow progress in this regard as the oil price rout dampened buyer enthusiasm for deals at the prices Shell is targeting. In 2016, Shell sold or agreed to sell around $6 billion of assets.
Shell, which is headquartered in Hague, the Netherlands, 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.
The Anglo-Dutch group’s divestment plans are targeted to weather the more than two-year downturn in oil prices and to improve its financials post the BG Group acquisition.
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Year to date, the Zacks categorized International Oil and Gas Integrated industry has registered an impressive growth of 21.6%. However, the Shell stock has outperformed the industry by gaining 24.6%.
Shell currently carries a Zacks Rank #3 ( Hold), which implies that the stock will perform in line with the broader U.S. equity market over the next one to three months.
Some better-ranked players from the broader energy sector include Braskem S.A. (BAK - Free Report) , Ocean Rig UDW LLC and McDermott International Inc. . Braskem and McDermott sport a Zacks Rank #1 (Strong Buy), whereas Ocean Rig carries a Zacks Rank #2 (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%.
Ocean Rig, on the other hand, delivered an average positive earnings surprise of 66.39% in the last four quarters.
In the last four quarters, McDermott posted an average positive earnings surprise of 250.00%.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>