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 /zigman2/quotes/204253697/delayed UK:RDSB +1.93% rose 2% and BP /zigman2/quotes/202286639/delayed UK:BP +1.65% added 1%, helping the broader FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.37% rise 0.3%.
Land Securities /zigman2/quotes/207145631/delayed UK:LAND +1.95% and British Land /zigman2/quotes/210491538/delayed UK:BLND +2.25% each rose 4%, as investors bought property stocks on reopening optimism. That reopening optimism weighed on Just Eat Takeaway /zigman2/quotes/216303066/delayed UK:JET +6.06% , the food-delivery service.
Aircraft-parts supplier Senior /zigman2/quotes/200980573/delayed UK:SNR +0.49% 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.