Royal Dutch Shell Sells Butagaz LPG Business -- Update
November 02 2015 - 12:28PM
Dow Jones News
By Maria Kunle and Ian Walker
LONDON--Oil major Royal Dutch Shell PLC (RDSB.LN) said Monday it
has now sold its Butagaz liquefied-petroleum-gas business in France
to DCC Energy Ltd. for EUR464 million ($512.78 million), following
an approach made in May.
Shell said its other businesses in France--aviation, commercial
fleet, lubricants, retail and bitumen--aren't affected by the
transaction.
Separately, Shell said it has sold its 75% interest in Tongyi
Lubricants in China to Huo's Group and Carlyle Group LP for
undisclosed terms, following regulatory approval.
"Both divestments are consistent with Shell's strategy to
concentrate its downstream footprint on assets and markets where it
can be most competitive, and to divest its LPG businesses
world-wide," the company said.
Shell announced in May that it had received an offer from DCC.
In July, Shell Chief Financial Officer Simon Henry separately
announced a cost-reduction program, including the planned
elimination of 6,500 jobs.
"We're not surprised by today's completion," said Sanford C.
Bernstein Research analyst Teng Ben. "Last decade, Shell was very
active in diversifying its business, and now it's divesting
less-profitable assets of them." She said she expects such
divestments to continue.
Shell's asset sales come as it is contending with losses driven
by the persistently low price of oil, as benchmark Brent crude
remains under $50 a barrel. Last week, the Anglo-Dutch company
reported a third-quarter loss of $6.1 billion on a
current-cost-of-supplies basis, compared with a $5.3 billion profit
in the same period of 2014.
The company is pulling back on expensive projects, having halted
exploration activities in Alaska and stopped the construction of
the Carmon Creek in-situ oil project in Canada. "These are
difficult but impactful decisions," Shell Chief Executive Ben van
Beurden has said of the retrenchment, pointing that it will help
company to become as a result "more focused and competitive."
Similar motivations are behind Shell's pending $70 billion
takeover of BG Group PLC, which Mr. van Beurden said would help the
company focus on "fewer and more profitable themes," such as deep
water and integrated gas.
The hard times aren't limited to Shell: British oil giant BP
PLC, which is British oil giant, on Tuesday said its third-quarter
replacement-cost profit fell more than 60% to $1.23 billion from
$2.39 billion.
Shell shares were up 0.9% to 1,715 pence in London trading.
Bernstein is "positive" about the company's shares, Ms. Ben said,
as sales of less-profitable assets should be a "springboard" for
improving Shell's strategic portfolio.
Write to Maria Kunle at maria.kunle@wsj.com and Ian Walker at
ian.walker@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 02, 2015 12:13 ET (17:13 GMT)
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