Royal Dutch Shell (LON:RDSA) has cancelled a $900-million deal to sell its gas field stakes in Thailand to Kuwait Foreign Petroleum Exploration Company (KUFPEC), the FTSE 100 group has said. Reuters meanwhile reported that the move came as the transaction took too long to complete.
Shell’s share price has been subdued in London in today’s trading, having given up 0.65 percent to 2,282.00p as of 10:20 BST, underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.03 percent lower at 7,466.09 points. The group’s shares have added nearly 14 percent to their value over the past year, and are up by over one percent in the year-to-date.
Shell announced in a statement yesterday that had agreed with KUFPEC to cancel the sale of the former’s 22 percent stake in the Bongkot natural gas field and adjoining offshore acreage. While the company did not disclose the reason for the move in the statement, a Shell spokeswoman told Reuters in an email that although the company “and the Thai government have worked together closely and collaboratively on the matter, the different interpretations of the treatment of share sale transactions were not resolved within Shell and KUFPEC’s agreed timeframe”.
“Therefore, both parties jointly decided to terminate the transaction,” the spokeswoman added.
The failed divestment was part of the FTSE 100 company’s massive disposal programme, in the wake of the acquisition of BG Group. Shell, however, assured investors in the statement that the divestment programme continue to make ‘good progress,’ and that it was on track to meet its target of $30 billion of divestments between 2016 and 2018, with more than $25 billion in completed, announced or in progress divestments.
The news comes after Jefferies recently reiterated its bullish stance on Shell, arguing that the recent oil price rally had given shareholders more reason to cheer.