Shell looking to sell $1 billion stake in Gulf Coast pipeline
Royal Dutch Shell Plc is reported to be looking for a buyer for its stake in a major crude oil pipeline in the Gulf of Mexico, seeking offers worth approximately $1 billion. According to Reuters, the oil giant is working with Barclays on soliciting offers.
The news service quoted a source that was familiar with the matter, saying that the company wanted to sell its stake in the pipeline known as Ho-Ho. The pipeline runs from Houston, Texas, to Houma, La., and has a capacity of 360,000 barrels of crude per day. The $3 billion pipeline was recently reversed in the hope that this could relieve the oversupply of crude oil in the area around Houston.
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Earlier reports by Bloomberg suggested that Shell was looking to recover the costs from the reversal process so that it could focus on more profitable drilling operations.
So far Shell has declined to provide any comment on the matter, but Reuters pointed out that earlier this month the company announced that for the final quarter of 2013 its earnings excluding identified items on current cost of supplies would come in at $2.9 billion. By comparison, market expectations for the period were about $4 billion. The forecast had been significantly reduced because of the influence of high production costs and poor refining margins, among other factors, analysts explained.