Shell announces plans to proceed with development of ultra-deepwater oil field

Mexico's National Hydrocarbon Commission approves Royal Dutch Shell's (RDS.A, RDS.B) application to conduct all approved activities in their exploration plan for the ultra-deep sea oil field Xochicalco in the Gulf of Mexico. Shell will drill a hole five miles deep to target a Wilcox formation with prospective reserves of up to 562 million boe. This increases Shell's investment in the project to $ 345.8 million from $ 104 million in the original exploration plan, which was first approved in June 2019. Xochicalco is located in the Perdido Fold Belt, an area with very little previous exploration activity and far removed from any existing infrastructure, making it technically challenging. Shell was recently downgraded to a sell equivalency rating at Barclays, which means the stocks are expensive relative to its short-term industrial performance.