Shell share price: Group seen retreating from North Sea

on Jun 13, 2016
Updated: Mar 11, 2020

Royal Dutch Shell (LON:RDSA) is preparing to retreat from high-cost oil operations in the North Sea, The Telegraph has reported, quoting analysts. The move will come as the Anglo-Dutch energy major, which acquired former smaller London-listed peer BG Group earlier this year, tries to adjust to the ongoing low oil price environment.

Shell’s share price has slipped marginally into the red in London this morning, having fallen 0.30 percent to stand at 1,774.69p as of 09:29 BST. The decline is largely in line with a fall in the broader market, with the benchmark FTSE 100 index having lost 0.37 percent to 6,093.43 points so far in today’s trading. The group’s shares have lost more than four percent of their value over the past year, but are up some 16 percent in the year-to-date.

Shell, which has already cut hundreds of jobs from its UK workforce, told investors last week that its planned $30-billion disposal programme to tackle its debt burden will focus on mature assets in established oil regions.
“They must be thinking very seriously about coming out of the North Sea,” Iain Reed at Macquarie told The Telegraph, adding that “various private equity funds” were already negotiating with the Anglo-Dutch group to buy up assets that are too small to be economic for the oil giant but could still offer value to smaller oil minnows.
The newspaper also quoted Ashley Kelty, an oil analyst with Cenkos, as commenting that if Shell “could get rid of all that they’d be quite happy to”.
“The North Sea is in terminal decline,” Kelty added. The Telegraph further noted that the analysts had pointed out that the group’s ‘politically sensitive’ decision to leave the North Sea was one that the oil major was unlikely to admit to while negotiations are taking place with potential buyers.
Shell updated investors on its strategy last week, unveiling cost cuts and saying that it would leave up to 10 countries and would offload up to 10 percent of its oil and gas production.
As of 09:57 BST, Monday, 13 June, Royal Dutch Shell Plc ‘A’ share price is 1,775.00p.