Shell Brasil Petróleo Ltda. has agreed to sell a 20% working interest in the Orca deep-water development in the Santos Basin to Kuwait Foreign Petroleum Exploration Company (KUFPEC), reducing Shell’s stake from 70% to 50% while retaining operatorship. The unitized development spans the BM-S-54 Concession Contract and the Sul de Orca Production Sharing Contract (PSC). Upon closing—expected by the end of 2026 subject to customary conditions—ownership will be Shell 50%, Ecopetrol 30% and KUFPEC 20%. The deal bolsters Shell’s capital efficiency by recycling funds into higher-return opportunities without ceding control of one of its flagship pre-salt assets.

By monetizing one-fifth of the Orca project, Shell aims to optimize its upstream portfolio and maintain its position as the largest foreign oil producer in Brazil. The transaction is structured to free up cash for reinvestment across Shell’s global operations, while ensuring project governance remains under Shell’s stewardship. The company projects the Orca development to deliver peak production of approximately 200,000 barrels of oil equivalent per day once fully ramped, and will continue to lead technical oversight, drilling programs and reservoir management.

Following a roughly $5 billion final investment decision on the Bonga North project in Nigeria, Shell approved an additional $2 billion for the HI/Feed shallow-water gas development. In October 2025, Shell Nigeria Exploration and Production Company and Sunlink Energies and Resources finalized investment terms for the HI gas project offshore Nigeria. These combined expenditures underscore Shell’s commitment to expanding its African portfolio, targeting combined gross production of over 150,000 barrels of oil equivalent per day by 2028 across the Bonga North and HI developments.

RBC Capital Markets recently downgraded Shell to Sector Perform, citing concerns over a cooling upstream portfolio and softer oil trading performance offset only partially by refining margin improvements. Investors will closely watch Shell’s fourth-quarter earnings release on February 5, particularly upstream production volumes, refining margins and cash flow generation. Management commentary on the timing of the Orca closing and capital redeployment plans will be key to assessing Shell’s ability to sustain dividend growth and capital returns in 2026.