Energy major Shell (NYSE:SHEL) has agreed to sell its Nigerian subsidiary, The Shell Petroleum Development Company of Nigeria (SPDC), in a deal worth $2.4 billion. The counterparties include a consortium of five companies.
The M & A deal is expected to preserve SPDC’s complete range of operational capabilities. Further, Shell will maintain a role in the management of the SPDC joint venture. The move is part of Shell’s strategy to exit onshore oil production in the Niger Delta and focus on deepwater and integrated gas positions in the country.
Under the deal, Shell will receive a cash consideration of $1.3 billion. The company also stands to receive additional payments of up to $1.1 billion. At the same time, Shell will provide term loans of up to $1.2 billion for funding requirements and up to $1.3 billion in future periods.
In another development, a group of 27 investors is taking united action to lower greenhouse gas emissions at Shell. The investors collectively hold a nearly 5% stake in Shell, and a vote on the resolution is expected at the company’s annual general meeting in May. Further, Shell has suspended shipments via the Red Sea amid the escalating attacks by the Houthis on maritime traffic. Last month, a vessel chartered by Shell had come under an attack in the region.
What is the Price Forecast for Shell?
Shares of the company have gained nearly 7% over the past year. Overall, the Street has a Moderate Buy consensus rating on Shell, and the average SHEL price target of $72.63 points to a 13.8% potential upside in the stock.
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