Shell is moving into the Electric space meaning its shifting its bets from solely oil.
What makes shell stock a good Stock to buy in 2017?
Oil giant Royal Dutch Shell said on Thursday that it had agreed to buy NewMotion, one of Europe’s biggest electric vehicle charging companies. It’s making a bet that “recharging” is the future of “fueling up”.
Shell buys electric-car charger New Motion
Royal Dutch Shell PLC (RDSB.LN) said Thursday that it is buying electric-vehicle charging provider NewMotion for an undisclosed sum.
New Motion operates more than 30,000 private electric charge points for homes and businesses in the Netherlands, Germany, France and the U.K. It also provides access to a network of more than 50,000 public charge points across 25 European countries, serving more than 100,000 registered charge cards.
Shell said that NewMotion will continue business as part of the enlarged group, and that both companies will work together to maximize the synergies and opportunities on offer.
What Does This Mean for Shell Shares?
NewMotion currently provides both private chargers for home use and maintains a network of public charging points across Europe. Shell’s plan is to roll out the technology across its global network of service stations.
Why Should I Buy Shell Stocks?
The bigger picture: Electric cars are starting to have a wider impact.
China has prioritized the development of electric vehicles, partly to reduce its reliance on imported oil and to help improve its notoriously awful air pollution.
Meanwhile, the metal cobalt, a key component of electric vehicles, has soared 75% in price this year and Tesla, perhaps the most high-profile electric vehicle manufacturer, has seen its stock jump 70%. The ultimate shape that the automotive industry will take over the coming decade or so isn’t quite clear. It is clear that investors, countries and companies (like Shell) are betting on a big role for electric cars.
For markets: The electrification of cars will hurt demand for oil – and Shell is hedging its bets for the long term. This will be a long hold of Shell shares.
Car fuel currently makes up about 20% of global demand for oil. If electric vehicles become ubiquitous, the demand for oil will suffer.
As a result, put downward pressure on the oil price – which wouldn’t be good for big oil producers like Shell. But Shell has already been decreasing its reliance on oil in addition to this latest purchase.
It notably spent almost $50 billion two years ago to buy BG Group, a huge British-based producer of natural gas. The long-term prospects for the oil industry are even being questioned by (some) of the oil majors themselves.
About Shell and Bp:
Shell, is a British–Dutch multinational oil and gas company headquartered in the Netherlands and incorporated in the United Kingdom. It is one of the six oil and gas “supermajors” and the sixth-largest company in the world measured by 2016 revenues (and the largest based in Europe).
Shell was first in the 2013 Fortune Global 500 list of the world’s largest companies; in that year its revenues were equivalent to 84% of the Netherlands’ $556 billion GDP.
Shell is vertically integrated and is active in every area of the oil and gas industry. Including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
It also has renewable energy activities in the form of biofuels, wind and hydrogen. Shell has operations in over 70 countries, produces around 3.7 million barrels of oil equivalent per day and has 44,000 service stations worldwide.
As of 31 December 2014, Shell had total proved reserves of 13.7 billion barrels of oil equivalent. Shell Oil Company, its principal subsidiary in the United States, is one of its largest businesses.
Shell holds 50% of Raízen, a joint venture with Cosan, which is the third-largest Brazil-based energy company by revenues and a major producer of ethanol.
Formed in 1907 through the amalgamation of the Royal Dutch Petroleum Company of the Netherlands and the “Shell” Transport and Trading Company of the United Kingdom. Until its unification in 2005 the firm operated as a dual-listed company.
Whereby the British and Dutch companies maintained their legal existence but operated as a single-unit partnership for business purposes.
Shell first entered the chemicals industry in 1929.
In 1970 Shell acquired the mining company Billiton, which it subsequently sold in 1994 and now forms part of BHP Billiton.
In recent decades gas exploration and production has become an increasingly important part of Shell’s business. Shell acquired BG Group in 2016, making it the world’s largest producer of liquefied natural gas (LNG).