The Zacks Analyst Blog Shell, Equinor and BP plc's

For Immediate ReleasesChicago, IL – January 2, 2025 – Zacks.com announces the list of stocks and featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Shell plc SHEL, Equinor ASA EQNR and BP plc’s BP.Here are highlights from Thursday’s Analyst Blog:Is Shell Stock a Smart Investment Option for Next Year?European energy giant Shell plc has positioned itself strategically for the future, particularly through its collaboration with Equinor ASA in the North Sea. This joint venture creates the U.K.’s largest producer on the UK Continental Shelf (UKCS), targeting 220,000 barrels of oil equivalent per day (BOE/d) by 2030. Despite such promising developments, London-based Shell’s shares have edged down 2.2% year to date, underperforming the Oil/Energy sector's 4% gain, though it has outpaced continental rival BP plc’s 13.2% decline. As 2025 approaches, Shell faces both opportunities and challenges that could shape its trajectory.Shell’s North Sea JV: A Strategic MoveShell's partnership with Norway's Equinor combines strengths in the North Sea, leveraging assets like Shell’s Jackdaw gas field and Equinor’s Rosebank oil field. Jackdaw is set to come online in 2025, contributing 40,000 BOE/d, while Rosebank’s 77,000 BOE/d production begins in 2027. This JV enhances Shell’s UKCS dominance and offers access to high-margin projects. However, the UK’s harsher fiscal framework, including a windfall tax of 38% until 2029, could dampen profitability.Strength in LNG and RenewablesShell remains the world’s largest LNG exporter, accounting for more than 15% of global LNG trade. Its integrated gas segment contributed $2.6 billion to net earnings in the third quarter of 2024. Upcoming projects like LNG Canada Phase 1 and Qatar expansions bolster growth prospects. Additionally, Shell's renewable energy investments, including wind and renewable natural gas, reflect a commitment to sustainability. However, renewables have yet to deliver strong returns, dragging overall profitability.Deepwater Exploration and Upstream ChallengesShell’s deepwater operations in the Gulf of Mexico and Brazil exemplify capital efficiency. Projects like Vito Phase 2 and Mero-3 aim to add 500,000 barrels per day, driving upstream growth. Yet, declining production in mature regions like the UKCS poses long-term risks. UKCS output has dropped to a quarter of its 1990s peak, and Shell’s limited reserves signal a potential upstream production decline, which could adversely impact revenues.Capital Allocation and Shareholder ReturnsShell’s financial discipline underpins its robust cash flow and shareholder returns. For the third quarter, the company reported $6 billion in adjusted earnings and $14.7 billion in cash flow from operations, enabling double-digit free cash flow yields. With a dividend yield of around 4.5% and 12 consecutive quarters of $3 billion in share buybacks, Shell demonstrates its commitment to rewarding investors. Despite a 7% year-over-year revenue decline to $71.1 billion in the quarter, the company beat the Zacks Consensus Estimate for earnings over the last four quarters, with the average surprise being 15.4%.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Regulatory and Environmental PressuresShell’s efforts to halve Scope 1 and 2 emissions by 2030 and reduce Scope 3 emissions by 15-20% underscore its commitment to sustainability. However, these goals require significant capital and operational adjustments, pressuring margins. Ongoing litigation over emissions and tighter regulations in Europe further complicate its energy transition strategy, potentially increasing costs and limiting flexibility.Shell’s Attractive Valuation and a Cautious OutlookShell’s current valuation, reflected in a Zacks Value Score of A, underscores its appeal in a competitive market. Trading 16% below three-year highs, the stock offers income-focused investors a compelling dividend yield and potential upside if energy prices strengthen. However, the company’s exposure to volatile oil and LNG markets, combined with challenges in its energy transition and regional operations, calls for a balanced perspective.Conclusion: A Hold for NowShell’s strategic initiatives, including its North Sea JV and leadership in LNG, highlight its strengths and growth potential. Yet, regulatory pressures, renewable energy underperformance and declining upstream reserves present significant risks. With a robust valuation and consistent financial performance, Shell remains an attractive but cautious investment. For now, SHEL stock is a Zacks Rank #3 (Hold) as the company navigates these mixed dynamics toward long-term growth. You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Why Haven't You Looked at Zacks' Top Stocks?Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.Today you can access their live picks without cost or obligation.See Stocks Free >>Media ContactZacks Investment Research800-767-3771 ext. 9339support@zacks.com                                     https://www.zacks.com                                                Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance  for information about the performance numbers displayed in this press release.Just Released: Zacks Top 10 Stocks for 2024Hurry – you can still get in early on our 10 top tickers for 2025. Handpicked by Zacks Director of Research Sheraz Mian, this portfolio has been stunningly and consistently successful. From inception in 2012 through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2025. You can still be among the first to see these just-released stocks with enormous potential. See New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report BP p.l.c. (BP): Free Stock Analysis Report Equinor ASA (EQNR): Free Stock Analysis Report Shell PLC Unsponsored ADR (SHEL): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks