Royal Dutch Shell (LON:RDSA) has kicked off production the Kaikias field in the Gulf of Mexico about one year ahead of schedule, the Anglo-Dutch oil major has said. The move came after the company trimmed the project’s costs by around 30 percent.
Shell’s share price has climbed into positive territory in today’s session, having added 0.71 percent to 2,625.50p as of 12:43 BST. The advance is largely in line with gains in the broader UK market, with the benchmark FTSE 100 index currently standing 0.69 percent higher at 7,731.02 points. The oil major’s shares have added just under a quarter to their value over the past year, as compared with about a 2.5-percent gain in the Footsie.
Early production at Kaikias field
Shell said in a statement yesterday that it had started production around a year earlier at the first phase of Kaikias, a subsea development in the Gulf of Mexico, with estimated peak output of 40,000 barrels of oil equivalent per day. The company explained that it had reduced costs by around 30 percent at the project since taking the investment decision early last year, lowering the forward-looking, break-even price to less than $30 per barrel of oil.
“We believe Kaikias is the most competitive subsea development in the Gulf of Mexico,” Shell’s Upstream Director Andy Brown commented in the statement. The Anglo-Dutch oil major holds an 80-percent interest in the field, which is located in the prolific Mars-Ursa basin around 130 miles (210 kilometres) from the Louisiana coast, with Japan’s Mitsui holding the remaining 20 percent.
Analysts on Anglo-Dutch oil major
Goldman Sachs reaffirmed Shell as a ‘top pick’ this week, without specifying a price target on the shares. According to MarketBeat, the Anglo-Dutch group currently has a consensus ‘buy’ rating and an average price target of 2,697.64p.