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Shell’s Brazilian Deep-Water Portfolio

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Shell’s robust operations

Royal Dutch Shell (RDS.A) has begun operations on the FPSO (Floating Production Storage Offloading) P-66 in the Lula South field, Santos Basin, Brazil. This is the company’s tenth FPSO in terms of working interest in the Compos and Santos basins. Shell also operates two other FPSOs, the BC-10 and the Bijupirá & Salema, on offshore Brazil. Thus, the Brazilian offshore is a vital part of Shell’s robust upstream portfolio.

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The P-66 is located 290 kilometers offshore Brazil and positioned at a water depth of 2,190 meters. The vessel can produce 150,000 bpd (barrels per day) of crude oil and 6.0 MMcfd (million cubic feet per day) of natural gas. The Brazilian deep-water portfolio is a vital growth avenue for Shell, and thus production from the tenth FPSO marks an achievement of a significant milestone. Shell’s global deep-water portfolio produces 725 Mboed (thousand barrels of oil equivalent per day). It’s anticipated to grow to 900 Mboed by 2020.

The stakeholders of the BM-S-11 block, which holds the Lula field, include operator Petrobras with a 65.0% stake, Shell’s subsidiary BG E&P Brasil Ltda with a 25.0% stake, and Galp’s subsidiary Petrogal Brasil with a 10.0% stake.

On achieving production from the P-66, Shell’s Upstream director Andy Brown stated, “The consortium has additional FPSOs in this series planned over the next three-years. Across Shell’s deep water business in Brazil, we’re investing in projects with competitive break-even prices, and our presence as Brazil’s second largest oil producer continues to grow.”

Shell (RDS.A) (RDS.B) is a member of the FTSE 100 Index, which is comprised of large-sized UK companies. But if you’re looking for large US companies’ exposure, you can look at the SPDR S&P 500 ETF (SPY) and the SPDR Dow Jones Industrial Average ETF (DIA). Both ETFs have ~6.0% exposure to energy sector stocks

Series overview

In this series, we’ll look at Shell’s overall performance in the recent quarter. Then we’ll see why most analysts rate Shell a “buy” and look at its dividend outflow trend. We’ll also examine Shell’s leverage and cash flow positions. Then we’ll go over Shell’s segmental dynamics, upstream and downstream performances, and portfolios.

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