Royal Dutch Shell plc’s RDS.A proposed liquefied-natural gas (LNG) plant won a 40-year export license from Canada's National Energy Board. It is to be noted that the development is one of the 24 terminals that are proposed for the west coast of Canada. The facilities, yet to be built, will likely dispatch LNG to the markets of Asia.
Last July, Shell and its consortium applied for the permit to the Canadian regulators. They in fact got the permit for the longest period ever issued by the National Energy Board of Canada.
Per the permit, the project will likely export 1.34 trillion cubic feet of natural gas every year. Investors should note that the facility is anticipated to commence exporting by 2022. Most importantly, it will likely take five long years for Shell to finish the construction of the plant. However, the company is yet to take any decision on the project amid fears related to massive costs as high as $28.39 billion.
In the consortium, Shell has a 50% ownership. PetroChina Company Limited PTR, the largest integrated oil company in China, has a 20% interest. Mitsubishi Corp. of Japan and Korea Gas Corp have a 15% stake each.
Shell is an integrated energy firm with a strong and diversified portfolio of development projects that offer attractive long-term opportunities. Predictably, the oil price slump has affected Royal Dutch Shell’s earnings and cash flows, in particular at its upstream unit. Furthermore, lost reserves/production from the group's asset sales in Nigeria and heightened risk related to the company’s remaining operations in the country cannot be ignored either.
As a result, the company currently carries a Zacks Rank #5 (Strong Sell), implying that it will significantly underperform the broader U.S. equity market over the next one to three months.
Meanwhile, some better-ranked players in the energy sector are Canadian Natural Resources Limited CNQ and Boardwalk Pipeline Partners, LP BWP. Both stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment