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BP, Shell to Restructure Ownership Interest in Atlantic LNG

BP plc BP and Shell plc SHEL agreed to restructure ownership in Trinidad and Tobago’s Atlantic liquefied natural gas (LNG) project, per a Reuters report.

The Atlantic LNG facility involves four liquefaction trains with a total capacity of about 15 million tons per year. Each train has different shareholder structures and trading agreements. The project contributes to the development of the country’s natural gas resources.

Trinidad’s National Gas Company had shares in the facility’s liquefaction train four. The company increased its ownership to trains two and three. Chinese Investment Co no longer has an active involvement in the project. The company had a 10% equity interest in the facility’s train one.

Shell owned a majority interest in Atlantic LNG, a prominent global LNG producer. Shell’s equity stake in the Atlantic plant ranged from 46% to 57.5% in each of the four trains at the facility.

Per the new ownership agreement, Shell and BP reduced participation in two trains. BP and Shell, the other consortium members, will remain owners of the facility’s three active liquefaction trains. This will result in a unitized facility owned by one joint venture with a common ownership and commercial framework for gas supply, processing, LNG production and natural gas liquids offtake.

The agreement will lead to greater commercial certainty by freeing up billions of dollars in investment for exploration and production. It will help develop the Manatee project, which holds 2.7 trillion cubic feet of gas reserves on the Trinidad side.

The restructuring of Atlantic LNG comes when the global LNG market is tightening due to lower supply growth and rising competition between Asia and Europe, resulting in soaring LNG prices. It creates an opportunity to redevelop the LNG business in Trinidad and Tobago.

The agreement will result in market-reflective pricing and higher government participation, allowing a more efficient operation.

Price Performance

Shares of BP have outperformed the industry in the past three months. The stock has gained 7% compared with the industry’s 6.9% growth.

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Zacks Rank & Key Picks

BP currently carries a Zack Rank #3 (Hold).

Investors interested in the energy sector might look at the following companies that presently carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Liberty Energy Inc. LBRT offers hydraulic fracturing services to onshore upstream energy companies across multiple basins in North America. LBRT’s third-quarter 2022 earnings per share of 78 cents beat the Zacks Consensus Estimate of 63 cents.

Liberty is expected to see an earnings surge of 298% in 2022. As of Sep 30, 2022, Liberty had $298 million of available liquidity, including $24 million of cash on hand and supported by the revolving credit facility. LBRT’s debt-to-capitalization stands at just 15.2% compared with most peers hugely burdened with debts.

RPC Inc. RES is among the leading providers of advanced oilfield services and equipment to almost all prospective oil and gas shale plays in the United States. RES’ adjusted earnings of 32 cents per share in the third quarter beat the Zacks Consensus Estimate of 25 cents.

RPC is expected to see an earnings surge of 2,933.3% in 2022. With no debt load, RPC had cash and cash equivalents of $35.9 million at the third-quarter end. This reflects the company’s strong balance sheet, providing it with massive financial flexibility and allowing it to remain afloat during tough times.

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