Multinational oil and gas company Shell PLC (NYSE: SHEL) plans to exit its joint venture operations with Russia-based energy firm Gazprom and related entities. These operations include a 50% stake in the Salym Petroleum Development and the Gydan energy venture as well as a 27.5% stake in the Sakhalin-II LNG facility.
The company also plans to back out from the Nord Stream 2 pipeline project following Russia’s invasion of Ukraine.
The CEO of Shell, Ben van Beurden, said, “Our immediate focus is the safety of our people in Ukraine and supporting our people in Russia. In discussion with governments around the world, we will also work through the detailed business implications, including the importance of secure energy supplies to Europe and other markets, in compliance with relevant sanctions.”
The British firm expects to record impairments as a result of this decision. It had non-current assets worth approximately $3 billion in these ventures at the end of last year.
Based out of London, Shell is a vertically integrated company, which is active in every area of the oil and gas industry, including exploration, production, refining, transport, distribution and marketing, petrochemicals, power generation, and trading.
It has operations in nearly 100 countries and runs almost 44,000 service stations across the world. Shell produces around 3.7 million barrels of oil equivalent per day.
Following the announcement on Monday, SHEL stock lost 3.4% to close at $52.39. It went down another 0.6% in the extended trading session to end the day at $52.10.
Last month, Bank of America Securities analyst Christopher Kuplent initiated coverage on the stock with a Buy rating and a price target of $66 (26% upside potential).
Overall, the stock has a Moderate Buy consensus rating based on 4 Buys and 2 Holds. The average Shell price target of $51.33 implies 2% downside potential. Shares have gained 32.3% over the past year.
TipRanks’ Stock Investors tool shows that investors currently have a Very Positive stance on Shell, as nearly 35% of investors on TipRanks increased their exposure to the stock over the past 30 days.
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