Europe’s largest oil company Royal Dutch Shell plc (RDS.A) has floated the 1600-foot long hull of its Prelude floating liquefied natural gas (FLNG) facility from the Samsung Heavy Industries’ yard in Geoje, South Korea.
Shell believes that upon completion, this floating facility will be the largest to have ever been built and would support the growing fuel needs with 3.6 million tons production capacity of liquefied natural gas (LNG) per annum. The FLNG unit would provide flexibility in development and deployment of the resource. The facility would convert natural gas produced at sea to LNG and directly supply it to ships that would carry it to customers.
Construction of the project began 3 years after the announcement and it is expected to start yielding gas in 2017. The Prelude FLNG will be operational for 25 years in a remote basin, 475 kilometers north-east of Broome in Western Australia. It is designed to withstand all weather conditions.
Shell is the operator of this joint venture project along with INPEX, KOGAS and OPIC that hold 17.5%, 10% and 5% stake, respectively.
Royal Dutch Shell is one of the largest integrated energy firms in the world with a strong and diversified portfolio of development projects that offer attractive long-term opportunities.
However, Shell’s relatively heavy downstream exposure leaves it less diversified than its integrated peers. As such, the group’s results remain greatly exposed to refining/marketing margins.
Shell currently holds a Zacks Rank #4 (Sell), implying that it is expected to underperform the broader U.S. equity market over the next one to three months.
Meanwhile, one can consider better-ranked energy sector stocks like Matador Resources (MTDR), SM Energy Company (SM) and Bonanza Creek Energy, Inc. (BCEI). These stocks currently sport a Zacks Rank #1 (Strong Buy).
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment