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Oil & Gas Stock Roundup: Shell in Australia & SLB in Russia Make Headlines
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It was a week when both oil and natural gas prices recorded small losses.
The headlines revolved around energy biggie Shell plc’s (SHEL - Free Report) investment in an Australian gas project and equipment supplier SLB’s (SLB - Free Report) expansion in Russia. Developments associated with ExxonMobil (XOM - Free Report) , Marathon Oil (MRO - Free Report) and NextDecade Corporation (NEXT - Free Report) also grabbed attention.
Overall, it was a bearish seven-day period for the sector. West Texas Intermediate (WTI) crude futures dropped around 0.3% to close at $76.65 per barrel, while natural gas prices edged down 0.9% to end at $2.12 per million British thermal units (MMBtu).
The negative crude price action reflects concerns over a potential U.S. recession and a decelerating Chinese economy.
Meanwhile, natural gas also settled with a loss in the face of supply and weather headwinds.
Recap of the Week’s Most Important Stories
1. London-based energy giant Shell and Asian behemoth PetroChina’s ongoing expansion of the Surat Gas Project (“SGP”) marks a significant step in enhancing their liquefied natural gas (“LNG”) production capacity.
As partners in the Arrow Energy joint venture, the two companies are committing to phase two of this ambitious Australian development, set to produce 130 million cubic feet per day at peak. By 2026, gas from SGP North will supply Shell’s Queensland Curtis LNG (“QCLNG”) facility on Curtis Island, a strategic hub for LNG exports and a critical asset in meeting both domestic and international gas demands.
Located in Queensland’s Surat Basin, the SGP taps into vast coal seam gas reserves estimated at five trillion cubic feet. The first phase, sanctioned in 2020, established over 600 production wells, while phase two aims to add 450 more. This will bolster Shell's long-term contracts, underpinned by a 27-year gas sales agreement. Arrow Energy's reliance on existing infrastructure minimizes disruption, ensuring that the project's environmental footprint remains relatively small while maximizing production efficiency. (Shell, PetroChina Surat Gas Project Expansion Underway)
2. SLB, an American oilfield services company, is expanding its operations in Russia, capitalizing on the exit of key Western competitors, following Russia's full-scale invasion of Ukraine, per a Financial Times report. The Houston-based company has secured new contracts and increased its workforce in Russia, which contrasts sharply with the actions of major competitors that withdrew from the market in 2022.
Despite the geopolitical tension, SLB has continued to strengthen its presence in Russia. Documents obtained by Global Witness and reviewed by the Financial Times reveal that in December, the Zacks Rank #3 (Hold) company's Russian division signed a contract with the Russian oil and gas institute Vnigni, committing to assist in the development of oil and gas projects.
Additionally, the company has posted more than 1,000 job advertisements since December, looking to fill various roles ranging from drivers to geologists. The job postings cover benefits including workplace meals, sports facilities access and discounted share schemes. (SLB Expands Russian Operations Despite Competitor Withdrawal)
3. ExxonMobil, the U.S. energy giant, is poised to further expand its oil operations in Guyana with a development plan for its seventh offshore project, Hammerhead, per a Reuters report. The plan is set to arrive by the first quarter of 2025. Guyana's Natural Resources minister, Vickram Bharrat, made this announcement, signaling another major leap in the South American nation’s journey toward establishing itself as a key player in the global oil market.
Guyana has quickly emerged as the world’s fastest-growing oil nation over the past decade, with more than 30 significant discoveries off its coast. A consortium led by ExxonMobil currently produces approximately 650,000 barrels of oil per day (bpd) from three production platforms. The latest estimates from the consortium indicate that Guyana's recoverable oil and gas reserves have increased to 11.6 billion barrels from the previously stated "more than 11 billion barrels" (used since 2022).
The Hammerhead project is expected to significantly contribute to Guyana’s oil output, with the potential to add up to 180,000 bpd once the production begins in 2029. This would bring the nation’s total oil production to more than 1.4 million bpd, solidifying its position as a burgeoning oil powerhouse. (ExxonMobil's Seventh Guyana Oil Project Set for 2025)
4. U.S. energy explorer Marathon Oil shareholder Martin Siegel has filed a lawsuit to stall the proposed acquisition of the company by larger rival ConocoPhillips. The investor argued that the proposed acquisition deal significantly undervalues Marathon.
The acquisition was announced in May 2024, with ConocoPhillips agreeing to buy Marathon for approximately $22.5 billion. The price includes $5.4 billion of net debt. Siegel stated that the shareholders of Marathon could lose about $6 billion in company value if the proposed acquisition takes place.
He also accused MRO’s management and financial advisor of misrepresenting the deal to the company’s shareholders while seeking their approval. Siegel claimed that management of Marathon and the advisors have a conflict of interest in this deal. The CEO of MRO stands to gain $70 million in stock grants on the deal’s closure, and the company’s financial advisor would gain a hefty amount in fees. (Marathon Shareholder Contests Merger With ConocoPhillips).
5. NextDecade recently faced a major blow against its Rio Grande LNG plant in Texas, which is currently under construction. A U.S. Court of Appeals has revoked the permit that was issued by the Federal Energy Regulatory Commission (“FERC”) for the Rio Grande LNG export project. NextDecade’s share price fell sharply following the announcement.
It was argued that FERC has failed to properly assess the environmental impact of the project as per the requirements of the National Environmental Policy Act and the Natural Gas Act. The court stated that a supplemental environmental impact statement should have been issued by FERC during the remand process.
NEXT has expressed its disappointment regarding the court’s decision. The LNG developer is currently reviewing the court’s ruling and assessing all its options. Just a day before the court’s judgment, NextDecade had awarded an engineering, procurement and construction contract worth $4.3 billion to Bechtel Energy Inc. for Train 4 of the LNG facility. (NextDecade's Rio Grande LNG Project Faces Legal Setback).
Price Performance
The following table shows the price movement of some major oil and gas players over the past week and during the last six months.
Stocks had a mostly mixed week, indicative of the uncertain trading in oil and gas. The Energy Select Sector SPDR — a popular way to track energy companies — rose 1.2% last week. Meanwhile, the sector tracker has increased 2.6% over the past six months.
What’s Next in the Energy World?
As usual, market participants will closely track the regular releases to look for guidance on the direction of the commodities. In this context, the U.S. government’s statistics on oil and natural gas — one of the few solid indicators that come out regularly — will be on energy traders' radar. Fuel demand and the rate of stock drawdowns in the coming weeks will determine the trend in commodity prices. Data on rig count from the oilfield service firm Baker Hughes, which is a pointer to the trends in U.S. crude/natural gas production, is closely followed, too.
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Oil & Gas Stock Roundup: Shell in Australia & SLB in Russia Make Headlines
It was a week when both oil and natural gas prices recorded small losses.
The headlines revolved around energy biggie Shell plc’s (SHEL - Free Report) investment in an Australian gas project and equipment supplier SLB’s (SLB - Free Report) expansion in Russia. Developments associated with ExxonMobil (XOM - Free Report) , Marathon Oil (MRO - Free Report) and NextDecade Corporation (NEXT - Free Report) also grabbed attention.
Overall, it was a bearish seven-day period for the sector. West Texas Intermediate (WTI) crude futures dropped around 0.3% to close at $76.65 per barrel, while natural gas prices edged down 0.9% to end at $2.12 per million British thermal units (MMBtu).
The negative crude price action reflects concerns over a potential U.S. recession and a decelerating Chinese economy.
Meanwhile, natural gas also settled with a loss in the face of supply and weather headwinds.
Recap of the Week’s Most Important Stories
1. London-based energy giant Shell and Asian behemoth PetroChina’s ongoing expansion of the Surat Gas Project (“SGP”) marks a significant step in enhancing their liquefied natural gas (“LNG”) production capacity.
As partners in the Arrow Energy joint venture, the two companies are committing to phase two of this ambitious Australian development, set to produce 130 million cubic feet per day at peak. By 2026, gas from SGP North will supply Shell’s Queensland Curtis LNG (“QCLNG”) facility on Curtis Island, a strategic hub for LNG exports and a critical asset in meeting both domestic and international gas demands.
Located in Queensland’s Surat Basin, the SGP taps into vast coal seam gas reserves estimated at five trillion cubic feet. The first phase, sanctioned in 2020, established over 600 production wells, while phase two aims to add 450 more. This will bolster Shell's long-term contracts, underpinned by a 27-year gas sales agreement. Arrow Energy's reliance on existing infrastructure minimizes disruption, ensuring that the project's environmental footprint remains relatively small while maximizing production efficiency. (Shell, PetroChina Surat Gas Project Expansion Underway)
2. SLB, an American oilfield services company, is expanding its operations in Russia, capitalizing on the exit of key Western competitors, following Russia's full-scale invasion of Ukraine, per a Financial Times report. The Houston-based company has secured new contracts and increased its workforce in Russia, which contrasts sharply with the actions of major competitors that withdrew from the market in 2022.
Despite the geopolitical tension, SLB has continued to strengthen its presence in Russia. Documents obtained by Global Witness and reviewed by the Financial Times reveal that in December, the Zacks Rank #3 (Hold) company's Russian division signed a contract with the Russian oil and gas institute Vnigni, committing to assist in the development of oil and gas projects.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Additionally, the company has posted more than 1,000 job advertisements since December, looking to fill various roles ranging from drivers to geologists. The job postings cover benefits including workplace meals, sports facilities access and discounted share schemes. (SLB Expands Russian Operations Despite Competitor Withdrawal)
3. ExxonMobil, the U.S. energy giant, is poised to further expand its oil operations in Guyana with a development plan for its seventh offshore project, Hammerhead, per a Reuters report. The plan is set to arrive by the first quarter of 2025. Guyana's Natural Resources minister, Vickram Bharrat, made this announcement, signaling another major leap in the South American nation’s journey toward establishing itself as a key player in the global oil market.
Guyana has quickly emerged as the world’s fastest-growing oil nation over the past decade, with more than 30 significant discoveries off its coast. A consortium led by ExxonMobil currently produces approximately 650,000 barrels of oil per day (bpd) from three production platforms. The latest estimates from the consortium indicate that Guyana's recoverable oil and gas reserves have increased to 11.6 billion barrels from the previously stated "more than 11 billion barrels" (used since 2022).
The Hammerhead project is expected to significantly contribute to Guyana’s oil output, with the potential to add up to 180,000 bpd once the production begins in 2029. This would bring the nation’s total oil production to more than 1.4 million bpd, solidifying its position as a burgeoning oil powerhouse. (ExxonMobil's Seventh Guyana Oil Project Set for 2025)
4. U.S. energy explorer Marathon Oil shareholder Martin Siegel has filed a lawsuit to stall the proposed acquisition of the company by larger rival ConocoPhillips. The investor argued that the proposed acquisition deal significantly undervalues Marathon.
The acquisition was announced in May 2024, with ConocoPhillips agreeing to buy Marathon for approximately $22.5 billion. The price includes $5.4 billion of net debt. Siegel stated that the shareholders of Marathon could lose about $6 billion in company value if the proposed acquisition takes place.
He also accused MRO’s management and financial advisor of misrepresenting the deal to the company’s shareholders while seeking their approval. Siegel claimed that management of Marathon and the advisors have a conflict of interest in this deal. The CEO of MRO stands to gain $70 million in stock grants on the deal’s closure, and the company’s financial advisor would gain a hefty amount in fees. (Marathon Shareholder Contests Merger With ConocoPhillips).
5. NextDecade recently faced a major blow against its Rio Grande LNG plant in Texas, which is currently under construction. A U.S. Court of Appeals has revoked the permit that was issued by the Federal Energy Regulatory Commission (“FERC”) for the Rio Grande LNG export project. NextDecade’s share price fell sharply following the announcement.
It was argued that FERC has failed to properly assess the environmental impact of the project as per the requirements of the National Environmental Policy Act and the Natural Gas Act. The court stated that a supplemental environmental impact statement should have been issued by FERC during the remand process.
NEXT has expressed its disappointment regarding the court’s decision. The LNG developer is currently reviewing the court’s ruling and assessing all its options. Just a day before the court’s judgment, NextDecade had awarded an engineering, procurement and construction contract worth $4.3 billion to Bechtel Energy Inc. for Train 4 of the LNG facility. (NextDecade's Rio Grande LNG Project Faces Legal Setback).
Price Performance
The following table shows the price movement of some major oil and gas players over the past week and during the last six months.
Company Last Week Last 6 Months
XOM -0.5% +9.3%
CVX +1.6% -6.9%
COP +2.4% -2.7%
OXY -1.4% -7.2%
SLB +2.8% -10.5%
RIG +0.1% +2.5%
VLO -0.8% +3%
MPC +2.4% +3.4%
Stocks had a mostly mixed week, indicative of the uncertain trading in oil and gas. The Energy Select Sector SPDR — a popular way to track energy companies — rose 1.2% last week. Meanwhile, the sector tracker has increased 2.6% over the past six months.
What’s Next in the Energy World?
As usual, market participants will closely track the regular releases to look for guidance on the direction of the commodities. In this context, the U.S. government’s statistics on oil and natural gas — one of the few solid indicators that come out regularly — will be on energy traders' radar. Fuel demand and the rate of stock drawdowns in the coming weeks will determine the trend in commodity prices. Data on rig count from the oilfield service firm Baker Hughes, which is a pointer to the trends in U.S. crude/natural gas production, is closely followed, too.