Royal Dutch Shell (LON:RDSA) has inked a deal to offload a refinery in California, the Anglo-Dutch oil major has said. The move is part of the blue-chip group’s strategy to reshape its refining business.
Shell’s share price was little changed in the previous session, inching 0.04 percent higher to close at 2,542.50p, underperforming the broader UK market, with the benchmark FTSE 100 index gaining 0.31 percent to 7,398.45 points. The oil major’s shares have given up about 3.4 percent of their value over the past year, as compared with a near four-percent fall in the Footsie.
Shell offloads California refinery
Shell announced in a statement yesterday that it had reached an agreement for the sale of its Martinez Refinery in California to PBF Energy, for $1-billion consideration plus the value of hydrocarbon inventory, crude oil supply and product offtake agreements, and other adjustments.
“This deal is another step in our transformation to high-grade and optimise our portfolio to drive resilient returns,” said Shell’s Downstream Director, John Abbott, commented in the statement. The company noted that the sale was in line with its strategy to reshape its refining business towards a smaller portfolio focused on further integration with Shell Trading hubs, Chemicals, and Marketing.
The deal is expected to wrap up this year, subject to closing conditions and regulatory approvals.
Analysts on FTSE 100 oil company
Barclays reaffirmed the Anglo-Dutch oil major as an ‘overweight’ this week, without specifying a target on the Shell share price. According to MarketBeat, the FTSE 100 company currently has a consensus ‘buy’ rating and an average valuation of 2,972.69p.
Shell updated investors on its strategy earlier this month, announcing that it was on track to deliver on its 2020 commitments. The company further increased its organic free cash flow outlook and signalled that it could distribute $125 billion or more to shareholders via dividends and share buybacks over the five-year period of 2021-2025.