Power Hedge: 8 FEB 2018
Summary
Analysts and the financial media were very excited about Royal Dutch Shell’s Q4 2017 results, but there is a lot to be concerned about here.
The company divested more than 250kboe/day in producing assets, which juiced its net income but hurt total production.
The company’s three-year RRR is only 78% with an 8.9-year reserve life. This needs to be corrected quickly if the company is to survive.
Royal Dutch Shell failed to generate sufficient cash to pay its shareholder distributions over the past few years but finally appears to have corrected this problem.