XOM Stock – Shell Stock Up As Oil Major Mulls Drastic Move In The U.S. After Climate Ruling
Royal Dutch Shell (RDSA) is reportedly considering selling its shale assets in the Permian Basin as the industry faces pressure to address climate change. Shell stock rose.
The Anglo-Dutch oil company’s deliberations include a sale of part or all of its 260,000 acres in the Permian Basin, sources told Reuters. The assets could be worth more than $10 billion, according to the sources. The area accounted for 6% of Shell’s production output last year.
The potential sale comes after a Dutch court ruled in May that Shell is partly responsible for climate change and ordered the company to slash carbon emissions 45% by 2030 vs. 2019 levels.
Earlier this year, the majority of Shell stock investors voted in favor of the company’s Energy Transition Strategy to reach net-zero emissions by 2050.
The International Energy Agency also rattled the oil and gas industry after releasing a report last month that recommended stopping new exploration and spending on new fossil fuel projects in order to meet the goals outlined in the Paris Agreement international treaty on climate change.
Last July, Chevron agreed to buy Noble Energy for $5 billion, increasing its presence in the prolific basin. Exxon also doubled its holdings in the Permian Basin, which accounts for one-third of U.S. production, with a major deal in 2017.
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Shell Stock Climbs On Possible Permian Exit
U.S.-listed Shell stock climbed 3.3% to 41.77 on the stock market today, consolidating with a 44.50 buy point. Exxon and Chevron were both up 0.8%.
A sale by Shell would follow a flurry of mergers and acquisitions in the Permian Basin in the past year.
In May, Pioneer Natural Resources (PXD) closed its $6.4 billion deal with DoublePoint Energy to buy nearly 100,000 acres in the core area of the Permian Basin. That followed a deal to buy Parsley Energy in an all-stock transaction valued at about $4.5 billion that closed earlier this year.
ConocoPhillips (COP) become one of the biggest Permian Basin producers and the largest U.S. independent oil company following its $9.7 billion acquisition of Concho Resources in January.
Last week, Occidental Petroleum (OXY) agreed to sell some of its Permian assets to Colgate Energy for $508 million as it looks to cut its debt load.
“We see a lot of activity in the M&A space for the E&P guys, especially here in the U.S. I think they have a lot of headwinds,” said Tom Watters, managing director at S&P Global Ratings.
Follow Gillian Rich on Twitter for energy news and more.
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