Royal Dutch Shell plc (ADR) ADR Class A (NYSE:RDS.A) to Divest Gaza Marine to Buoy Finances, Boost Portfolio


Royal Dutch Shell plc (ADR) ADR Class A (NYSE:RDS.A) has announced plans to sell off set 90% of its stake in the Gaza Marine gas project to Palestine Investment Fund. The plans is part of the company’s its $30-billion divestment program. The company is yet to reveal the financial details of the transaction.

The Anglo-Dutch company had acquired ownership of the Gaza Marine gas project which is located offshore Palestine, through the BG Group buyout. BD Group discovered the field back in 200 but due to commercial and political concerns did not commence its development. The Palestine Investment Fund is looking for a capable and reliable international development partner to take 45% stake of the project together with designing a field development plan with the operator. The development of the Gaza marine project will help in meeting the increasing demand for gas-fired power plants in Palestine. Additionally, it will help in positioning the country as an exporter of energy.

This move is expected to help Shell seamlessly proceed with its divestment program. The deal will offer the company with a lifting as it moves to cut on its debt following the buy off of BG Group. The acquisition of BG Group cost Shell $47 billion. The divestment program will help in reducing the company’s cost, boost cash flow as well as return on capital.

With the company folding up divestment deals valued at over $23 billion, it is now focusing on meeting its target for this year. Additionally, the company has announced that it will be disposing off some assets valued at around $2 billion. The company is currently having talks for potential transactions for additional divestment deals valued at $5 billion. The talks are already in advanced stages.

With its headquarters in Netherlands, Shell is one of the biggest integrated energy companies which is engaged in the production, distribution, refining and marketing of natural gas and liquid oil. Currently the company holds a Zacks Rank #3 (Hold).