By Steve Goldstein
Royal Dutch Shell was named by JPMorgan Cazenove as its top pick in the oil sector, as the broker flagged its cash-generation potential.
The analysts said selling Shell’s Permian Basin assets could fetch at least $10 billion and help not just its decarbonization push but also give balance sheet and capital allocation headroom. At $60 a barrel, net debt could fall below $40 billion by the end of 2022, the analysts said, and that Shell could return a cumulative 18% of its market cap to investors in stock buybacks and dividends between 2021 and 2023.
The U.K. oil and gas sector climbed on Tuesday as Brent crude-oil futures reached $75 a barrel, after closing Monday at its highest level since Oct. 31, 2018. Shell (LON:UK:RDSB) rose 2% and BP (LON:UK:BP) added 1%, helping the broader FTSE 100 (FTSE:UK:UKX) rise 0.3%.
Land Securities (LON:UK:LAND) and British Land (LON:UK:BLND) each rose 4%, as investors bought property stocks on reopening optimism. That reopening optimism weighed on Just Eat Takeaway (LON:UK:JET) , the food-delivery service.
Aircraft-parts supplier Senior (LON:UK:SNR) slumped 8% to 152 pence after U.S. private-equity firm Lone Star said its fifth takeover attempt, worth 200 pence per share, would be its final offer.