Royal Dutch Shell plc (RDS.A - Free Report) , a European oil giant is set to offload its remaining portfolio of energy assets in New Zealand to Austria-based OMV AG (OMVJF - Free Report) in a $578 million deal, moving ahead with its divestment goals.. The move marks Shell’s exit from the country after having operated there for more than a century.
Per the deal, Shell will sell its 84% interest in the Maui gas field located off the Taranaki coast. The company will also jettison its 48% stake in the Pohokuru field along with Tank Farms. Additionally, it will divest its 61% interest in the Great South Basin venture located off the coast of Otago and Southland, which also includes a drilling commitment of around $50 million. OMV AG already holds 10% and 26% stakes in Maui and Pohokuru, respectively. After completion of the deal, the employees of Shell in its New Zealand’s business will be transferred to OMV AG. Subject to satisfactory closing conditions and regulatory approvals, the deal is set for closure by the fourth quarter of 2018.
Shell had announced a strategic review of its operations in New Zealand in 2015. In fact, last April, the supermajor had entered into a deal with Todd Energy to vend 50% interest in the onshore Kapuni oil and gas field in the Taranaki region of New Zealand. The Anglo-Dutch energy giant had been contemplating to sell the remaining stakes in the country since then, in order to further streamline its portfolio.
Apart from upgrading its portfolio and simplifying operational structure by vending the less-profitable non-core assets, the move will help Shell to proceed with its $30-billion divestment program. The deal provides the company a major uplift in its drive to decrease debt following the acquisition of BG Group for $47 billion. The divestment is expected to reduce the company’s cost, enhance cash flow and return to capital.
With Shell already closing more than $23 billion divestment deals, it remains on track to meet its target by 2018. Further, the company announced asset disposals around $2 billion and an additional $5 billion divestment deals are already in advanced stages of talks for prospective transactions.
Zacks Rank & Other Stocks to Consider
Headquartered in Netherlands, Shell is one of the largest integrated energy companies and is engaged in production, refining, distribution, and marketing of oil and natural gas. Shell holds a Zacks Rank #2 (Buy). Shares of Shell have moved up 18.7% over a year, outperforming the industry’s gain of 6.7%.
Other top-ranked stocks in the same industry include BP plc (BP - Free Report) and Statoil ASA . While Statoil sports a Zacks Rank #1 (Strong Buy), BP carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Statoil topped earnings estimates in each of the last four quarters, with an average of 23.18%.
BP delivered an average positive earnings surprise of 30.73% in the trailing four quarters.
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