Shell's U.S. exit gives investors a sugar rush - Reuters

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A flare burns off excess gas from a gas plant in the Permian Basin in Loving County, Texas, U.S., November 25, 2019. Picture taken November 25, 2019.

LONDON, Sept 21 (Reuters Breakingviews) - Royal Dutch Shell (RDSa.L), has left the building. The $153 billion Anglo-Dutch oil giant on Monday offloaded 225,000 acres of shale assets in the Permian basin to U.S. rival ConocoPhillips (COP.N) for $9.5 billion in cash. With oil at $70 per barrel, the price looks on the low side: consultancy Wood Mackenzie estimates the assets are worth more than $13 billion. But at $42,000 an acre it’s roughly in line with recent local deals, according to Berenberg analysts. And given a Dutch court has ordered Shell to slash carbon emissions by 45% by 2030, boss Ben van Beurden needs to cut somewhere .

In the short term, Shell shareholders win. Pocketing an extra $7 billion could take their total shareholder return in 2021 to 10%, Berenberg reckons and partly makes up for last year’s decision to slash the dividend by two-thirds. Chevron (CVX.N) boss Mike Wirth recently opined that it’s better to give shareholders cash than invest in wind and solar on their behalf. Even so, if Shell wants a future after oil, van Beurden may need to do more of the latter. (By George Hay)

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Editing by Peter Thal Larsen and Karen Kwok

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

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Shell's U.S. exit gives investors a sugar rush - Reuters
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