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London Markets

June 22, 2021, 7:51 a.m. EDT

Royal Dutch Shell’s cash-generation potential is highlighted by JPMorgan as FTSE 100 rises

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.

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