Oil Prices Surge Amid Conflict, Positive Long-Term Outlook
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 days ago
0mins
Source: Fool
- Surge in Oil Prices: Brent crude oil prices have surged over 50% this year, rising from around $60 to over $90 per barrel, although still below the nearly $120 peak seen at the war's onset, reflecting market sensitivity to Middle Eastern tensions.
- Long-Term Price Expectations: Shell's CEO, Wael Sawan, anticipates that while oil prices may dip in the short term after the Strait of Hormuz reopens, the ongoing growth in global oil and gas demand will drive prices up over the next five to ten years, necessitating the exploration of more challenging resources to meet this demand.
- Investment in Future Supply: Shell aims to add 1 million barrels of oil equivalent per day by 2030 and is exploring new resource opportunities in Angola and South Africa, which will help meet future global supply needs and capitalize on rising prices.
- Industry Dynamics: Other major oil companies like ExxonMobil and Occidental Petroleum are also investing in new resources, with ExxonMobil's investment in the UD1 block in Trinidad and Tobago potentially paving the way for nearly $22 billion in future development, further driving industry growth.
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Analyst Views on SHEL
Wall Street analysts forecast SHEL stock price to fall
10 Analyst Rating
5 Buy
5 Hold
0 Sell
Moderate Buy
Current: 85.850
Low
41.75
Averages
74.27
High
91.00
Current: 85.850
Low
41.75
Averages
74.27
High
91.00
About SHEL
Shell plc is an international energy company engaged in the principal aspects of the energy and petrochemical industries. The Company's segments include Integrated Gas, Upstream, Marketing, Chemicals and Products, Renewables and Energy Solutions, and Corporate. The Integrated Gas segment includes liquefied natural gas (LNG), conversion of natural gas into gas-to-liquids (GTL) fuels and other products. It includes natural gas and liquids exploration and extraction, and the operation of the upstream and midstream infrastructure. The Upstream segment includes exploration and extraction of crude oil, natural gas and natural gas liquids. It also markets and transports oil and gas and operates the infrastructure necessary to deliver them to the market. The Marketing segment comprises the Mobility, Lubricants, and Sectors & Decarbonization businesses. The Chemicals and Products segment include chemical manufacturing plants with their own marketing network, and refineries.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Strategic Shift: This sale reflects Shell's departure from its ambitions in renewable energy, as the company opts to focus on higher-return fossil fuel operations, showcasing a major strategic pivot under the leadership of new CEO Wael Sawan since early 2023.
- Asset Divestiture: Shell is divesting its European onshore renewable businesses and reviewing strategic options for its India-based Sprng Energy unit, which was acquired for $1.5 billion just four years ago, indicating a reassessment of its renewable energy investments.
- Market Impact: This strategic adjustment may negatively affect Shell's stock price, as market confidence in its future growth potential diminishes, particularly against a backdrop of shrinking reserves and lackluster growth, leading to potential pricing pressures on its shares.
See More
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- Acquisition Details: On April 27, Shell announced a $16.4 billion cash-and-stock acquisition of ARC Resources, expected to add approximately 370,000 boe/day to Shell's production portfolio, aimed at enhancing the company's long-term oil and gas output and competitive positioning.
- Payment Structure: Under the deal terms, Shell agreed to pay ARC shareholders C$8.20 in cash and 0.40247 Shell shares for each ARC share, representing about 25% cash and 75% stock, equating to C$32.80 per share based on Shell's closing price at the time.
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See More
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- Significant Revenue Decline: C3.ai reported $250.3 million in revenue for fiscal 2026, reflecting a 35% year-over-year decline, indicating severe challenges in customer acquisition and retention that undermine its market competitiveness.
- Escalating Losses: The company incurred a net loss of $470.4 million in fiscal 2026, a 63% increase from the previous year's losses, forcing C3.ai to cut approximately 35% of its workforce to mitigate financial strain.
- Pessimistic Future Revenue Outlook: Management forecasts revenue between $210 million and $240 million for fiscal 2027, suggesting a year-over-year decline even at the upper end, highlighting significant hurdles in returning to growth.
- Stock Valuation Appears Cheap: While C3.ai's price-to-sales ratio stands at 6.1, below the five-year average of 10.5, the forward P/S ratio rises to 6.9 due to declining revenue expectations, indicating that investors should approach the stock with caution despite its falling price.
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- Management Disruption Impact: C3.ai's founder Thomas Siebel stepped down as CEO last year due to health issues, leading to a sharp decline in sales, highlighting the significant impact of management changes on business operations.
- Revenue Decline: C3.ai generated $250.3 million in revenue for fiscal 2026, a staggering 35% drop year-over-year, while the company reported a net loss of $470.4 million, which is 63% higher than the previous year's loss, indicating severe financial challenges.
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See More
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- Retail Investor Sentiment: Despite the rise in major indices, retail sentiment on Stocktwits was 'bearish', expressing skepticism about the longevity of the ceasefire, indicating a divergence in market participant views that could affect short-term investment decisions.
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See More
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- Sale Process: The sale process is expected to begin later this year, with completion targeted for 2027; Shell has engaged Rothschild & Co. and PJT Partners as advisors, demonstrating the company's commitment to optimizing its asset portfolio.
- Reducing Renewable Investments: Shell has been steadily exiting its European onshore renewable business and India's Sprng Energy, further decreasing its reliance on green energy assets, which underscores the company's focus on capital discipline.
- Market Reaction: SHEL stock rose 0.35% in Friday's trading, with a 27% increase over the past 12 months, indicating positive investor sentiment towards the company's strategic adjustments.
See More
