Shell (RDSA) & Harbour (HBR): Should you buy these 2 FTSE oil stocks?

Highlights

  • Oil prices softened today as supply from hurricane hit Gulf of Mexico slowly returned.
  • Demand is expected to outstrip supply, as the IEA predicts oil inventories to touch lows this November in OECD countries.

Oil prices fell today, with more offshore oil supply coming back into production in the Gulf of Mexico after two hurricanes halted production in the region, namely Hurricane Ida and Hurricane Nicholas, albeit at a slow pace.

About 28 per cent of crude oil production in the Gulf of Mexico remained offline as of 16 September. Brent oil November futures were trading at US$ 75.35, down by 0.42 per cent on Friday at 08:28 AM BST.

Also, OECD oil inventories are forecasted to touch a low in November, according to the energy body the International Energy Agency (IEA). Thus, suggesting that the recovery in global oil supply will be outstripped by demand.

Moreover, investors shed off risk concerns in Southeast Asia as covid-19 cases seemed to have reached a peak in several countries in the region, including Indonesia, Thailand and others.

Let us take a look at two FTSE oil and gas stocks and see how they reacted to the news:

  1. Royal Dutch Shell PLC (LON: RDSA)

Royal Dutch Shell is a British multinational oil giant with significant exposure in the Gulf of Mexico. Shell’s West Delta-143 offshore facility was temporarily shut in the region for assessments following Hurricane Ida and is set to resume operations to restore production.

Also, Shell’s offshore platform Perdido restarted operations after Hurricane Nicholas today.

Shell has made several new announcements as part of its commitment towards achieving net zero transition, most recently stating its plans to build a biofuels plant in the Netherlands to meet its 2050 net zero goals.

Royal Dutch Shell price performance

(Image Source: Refinitiv)

Shell’s shares ended at GBX 1,464.20, down by 0.81 per cent on 16 September. It made a flat start today, trading at GBX 1,464.00 at 9:31 AM BST. Its market cap stood at £60,050.35 million, and its one-year return is at 36.49 per cent.

  1. Harbour Energy PLC (LON: HBR)

FTSE 250 listed firm Harbour Energy is a UK based independent oil and gas firm.

According to recent media reports, Harbour’s rival, another oil and gas firm Neptune Energy Group Ltd, is considering a merger with Harbour.

If this merger goes through, it will combine the two largest independent oil and gas explorers with major assets located in the UK’s North Sea. The combined entity’s expected market value will be at least US$ 10 billion.

Harbour’s CEO Linda Cook had said earlier this year in April that the company was looking into identifying potential acquisition opportunities. Harbour had come into existence from the merger between energy firms Premier Oil and Chrysaor.

The company moved to the FTSE 250 index from the FTSE Small cap index last month in the latest reshuffle.

Harbour Energy price performance

(Image Source: Refinitiv)

Harbour’s shares have made a soft start and were trading at GBX 366.80, down by 2.24 per cent on 17 September. Its market cap stood at £ 3,472.60 million on Thursday.

Bottom Line

Shell’s solid progress towards meeting its energy transition goals and quickly resuming production following the impact of two hurricanes indicates the operational prowess of the company. At the same time, Harbour’s recent move to the midcap segment on the FTSE and a potential merger highlights the company’s push towards sustaining a growth momentum, making it an attractive investment opportunity.

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