Shell plc’s SHEL affiliate, Shell Exploration and Production, has inked a contract with the Bulgarian energy ministry for oil and gas exploration offshore Block 1-26 of the Khan Tervel field, in the country's exclusive economic zone in the Black Sea. The agreement was followed by a competitive bidding process that took place in June. The block, spanning an impressive 4,032 square kilometers, offers robust potential for oil and gas exploration.
An Insight Into the Competitive Bidding Process Won by SHEL
On June 18, Bulgaria’s energy minister initiated a bidding procedure for a permit for oil and gas exploration in the Khan Tervel field offshore in the Black Sea. The exploration permit with a total term of five years has the option of being extended twice by two years.
The bidding process required the applicants to fulfill certain criteria relating to their revenue generation and also required them to have software for interpreting seismic data to carry out the project activities.
The bidding proposal attracted interest from four companies. However, only two companies submitted full proposals. Shell secured the contract backed by its robust exploration plan, environmental safeguards and commitment to local capacity building.
SHEL’s Work Program Under the Deal
Per the deal, SHEL’s exploration program would include comprehensive geological and geophysical work, notably new 3D seismic surveys and detailed data interpretation. These efforts would aim to evaluate the region’s true potential beneath the Black Sea seabed.
Beyond exploration, Shell has pledged to finance educational initiatives designed to train Bulgarian specialists in the fields of oil and gas exploration and production. This not only supports local employment but also contributes to the nation’s long-term technical capabilities in the energy sector.
Shell is also committed to carrying out all exploration activities by adhering to stringent safety and environmental standards.
A Step Toward Bulgaria’s Energy Independence
Until 2022, Bulgaria, a European Union member, had been totally dependent on Russia for its energy supplies. However, taking a step toward energy independence, the country is now looking to diversify its gas supplies and find cheaper sources.
The country’s energy minister highlights the contract’s potential to support Bulgaria’s energy independence. If viable resources are discovered, up to 30% of the benefits will be returned to the state through concession fees as the country will not incur any transit fee for delivery. Additionally, Shell will pay an annual area fee and provide a bonus payment over the five-year exploration period.
In a significant move toward energy independence, Bulgaria also signed an agreement with OMV Offshore and NewMed Energy in March to advance exploration activities in Block 1-21 Khan Asparuh, situated in the country’s Black Sea offshore zone.
SHEL’s Zacks Rank and Key Picks
London-based Shell is one of the primary oil supermajors — a group of the U.S. and Europe-based big energy multinationals with operations that span almost every corner of the globe. Currently, SHEL has a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at some top-ranked stocks like Archrock, Inc. AROC, Delek Logistics Partners, LP DKL and Diversified Energy Company PLC DEC. While Archrock and Delek Logistics currently sport a Zacks Rank #1 (Strong Buy) each, Diversified Energy carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Houston-based Archrock is a provider of natural gas contract compression services as well as a supplier of aftermarket services for compression equipment. AROC operates in the oil- and gas-producing regions primarily in the United States. The Zacks Consensus Estimate for AROC’s 2025 earnings indicates 56.19% year-over-year growth.
Delek Logistics Partners owns, operates, acquires and constructs crude oil and refined products logistics and marketing assets. DKL operates crude oil transportation pipelines, refined product pipelines, crude oil gathering systems and associated crude oil storage tanks. The Zacks Consensus Estimate for DKL’s 2025 earnings indicates 34.45% year-over-year growth.
Birmingham-based Diversified Energy is an energy company focused on natural gas and liquids production, transport, marketing and well retirement. The Zacks Consensus Estimate for DEC’s 2025 earnings indicates 70.77% year-over-year growth.
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Diversified Energy Company PLC (DEC): Free Stock Analysis Report Delek Logistics Partners, L.P. (DKL): Free Stock Analysis Report Archrock, Inc. (AROC): Free Stock Analysis Report Shell PLC Unsponsored ADR (SHEL): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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