Leading European oil firm Royal Dutch Shell plc (RDS.A) has signed a deal with Infragas Norge AS – an indirect wholly-owned subsidiary of one of Canada’s largest pension investment managers – for the sale of its stake in a natural gas transport infrastructure joint venture, Gassled, for 3.9 billion kroner, or $723 million. Shell will execute the deal through its wholly owned subsidiary A/S Norske Shell.
Per the terms of the agreement, Infragas, which is owned by the Public Sector Pension Investment Board, will acquire Shell's 5.0% interest in the Gassled joint venture along with the associated 3.0% interest in the Dunkerque Terminal and 2.5% stake in the Zeepipe Terminal.
Formed in 2003, the Gassled joint venture is Norway's integrated gas transportation system and processing facility that distributes most of the gas production on the Norwegian Continental Shelf to consumers on the European continent and in the United Kingdom.
Apart from Shell, Gassled is co-partnered by Petoro AS, Statoil ASA (STO), Njord Gas Infrastructure AS, Total SA (TOT), Norsea Gas AS, ConocoPhillips (COP), Eni SpA (E), Dong E&P Norge AS, GDF Suez E&P Norge AS and RWE Dea Norge AS.
The deal is expected to close in last quarter of 2011, subject to regulatory and customary approvals.
This disposition forms a part of Shell’s restructuring initiatives by exiting unprofitable marketsto improve its performance and remain competitive in this difficult environment.
Royal Dutch Shell owns one of the largest integrated energy businesses in the world. The group has operations all over the world and is involved in various activities related to oil and natural gas, chemicals, power generation, renewable energy resources and other energy-related businesses.
We remain optimistic on the company’s prospects given its exposure to major projects with an emphasis on technological application to unconventional resources. Shell’s consistent financial and operational performance along with overseas market exposure enhances its portfolio and competitiveness.
However, Shell’s upside potential is restricted by a volatile macro backdrop, weak demand for fuel and international business risks. Hence, we are maintaining our long-term Neutral recommendation on the stock. Shell currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.
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