Shell's Onshore Oil Field Sale Worth $1.3B in Nigeria Suffers Setback

Core Viewpoint - Shell plc's divestment deal to sell its onshore Nigerian subsidiary for $1.3 billion has encountered regulatory challenges, as the future buyer lacks the necessary qualifications to manage the assets [1][2]. Group 1: Overview of SHEL's Divestment Deal - In January 2024, Shell announced a divestment strategy to sell 15 oil mining leases and three shallow-water operations held via its Nigerian subsidiary, SPDC, to refocus on more profitable ventures like deep-water offshore fields [2]. - The completion of the deal was contingent upon regulatory approvals and other conditions, which were recently rejected due to the Renaissance Group's inability to manage the assets [2]. - The sale agreement stipulated a change of ownership while retaining operating capabilities with SPDC, which would continue to support the management of SPDC JV facilities for feed gas supply [2]. Group 2: Future Projections for Shell - Following the rejection of the divestment plan, Shell faces uncertainty regarding its onshore assets in Nigeria but is actively engaging with regulatory authorities to provide necessary information for the sale process [3]. Group 3: SHEL's Zacks Rank and Key Picks - Shell is classified as a primary oil super major with a Zacks Rank of 3 (Hold) and remains a significant investor in Nigeria despite the divestment of its onshore business [4]. - Investors may consider better-ranked stocks in the energy sector, such as PEDEVCO Corp. (Zacks Rank 1), Nine Energy Service, Inc. (Zacks Rank 2), and MPLX LP (Zacks Rank 2) [4]. - PEDEVCO Corp. has seen a 33.33% improvement in the Zacks Consensus Estimate for its 2024 earnings over the past 60 days [4]. - Nine Energy Service, Inc. has an expected EPS growth rate of 23.08% for the current quarter, outperforming the industry's growth rate of 6.14% [5]. - MPLX LP's expected EPS growth rate for three to five years is 8.50%, also exceeding the industry's growth rate of 5.80% [5].