Royal Dutch Shell (LON:RDSA) is planning to acquire an oil-block stake in a second deal in South Africa’s relatively unexplored waters, Bloomberg has reported. The news comes after it recently emerged that the Anglo-Dutch oil major had started renegotiating oil contracts with Nigeria.
Shell’s share price fell in the previous session, giving up 0.87 percent to close at 2,460.00p. The stock, however, outperformed the broader market selloff which saw the benchmark FTSE 100 index give up 83.65 points to end trading 1.15 percent lower at 7,185.30. This morning, the shares have climbed in early trade, having gained 1.20 percent to 2,489.50p as of 08:16 BST, as compared with about a 0.23-percent gain in the Footsie.
Shell planning SA expansion
Bloomberg reported yesterday that Shell had applied to take a stake in a license owned by OK Energy, located in deep waters off South Africa’s west coast, according to Petroleum Agency South Africa.
“We have indeed received an application which is awaiting ministerial approval,” the regulator told the newswire in a reply to questions about the block.
Bloomberg notes that Shell exited its Orange Basin permit two years ago, citing an enduring low-price environment, and had also complained at the time over uncertainty over resource laws in South Africa. The country meanwhile has recently pledged to draft separate legislation for oil and gas.
Analyst ratings update
UBS reaffirmed the Anglo-Dutch oil major as a ‘buy’ yesterday, with a target on the Shell share price of 2,900p. According to MarketBeat, the blue-chip group currently has a consensus ‘buy’ rating and an average valuation of 2,972.69p.
Shell posted its first-quarter results earlier this month, posting a fall in earnings amid lower realised chemicals and refining margins, decreased realised oil prices and lower tax credits, partly offset by stronger contributions from trading as well as increased realised LNG and gas prices.