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When Will Royal Dutch Shell Raise Its Dividend?

Aristofanis Papadatos: Nov 16, 2017

Summary

  • Royal Dutch Shell has not cut its dividend since World War II.
  • However, the company has paid the same dividend for 15 consecutive quarters.
  • Therefore, the big question is if and when its shareholders should expect the next dividend hike.

Royal Dutch Shell (RDS.A) (NYSE:RDS.B) offers a generous dividend yield, which currently stands at 5.9%. Nevertheless, the oil major has paid the same dividend for 15 consecutive quarters. Therefore, as most of its shareholders are holding the stock for its dividend, it is only natural that they wonder if and when they should expect the next dividend hike.

First of all, Shell has an enviable record in dividend payments to its shareholders. To be sure, the company has not cut its dividend since World War II. This achievement certainly confirms the exceptional business performance of the company. However, the company has markedly slowed its dividend growth rate during the last decade, as it has raised it by only 2.7% on average during this period. read more

Government’s Groningen gas production plan rejected by advisory council

Nov. 15, 2017 7:55 AM ET|By: , SA News Editor The Netherlands’ top administrative court rejects the government’s plan to cap production at the Groningen gas field and orders a new decision on how much gas can be extracted from the field where drilling has triggered minor earthquakes. The government had proposed capping production at 21.6B cm/year over the next five years, down from 24B cm in the production year just ended and 39.4B cm in 2015-16; the court orders the government to review its decision within the next 12 months, but production may be maintained at 21.6B cm for the year through Oct. 1, 2018. NAM, the joint venture between Royal Dutch Shell (RDS.A, RDS.B) and Exxon Mobil (NYSE:XOM) that operates the Groningen field, says it is studying the ruling.

SOURCE

RELATED

DutchNews.nl: Gas group NAM says more serious earthquakes will hit Groningen: 1 October 2014

EnergyVoice.com: Quakes force Dutch lawmakers to cut gas production: 11 March 2015

Bloomberg: Dutch Quakes Toss Wrench Into Gears of Europe Gas Market: 10 March 2015

Devastating report of a scary scenario: 07 March 2015

Dutch government says sorry for quakes caused by Groningen gas field: 02 March 2015

Reuters: Bells toll for Europe’s largest gas field: 02 March 2015

Groningen Gas Field Shock: Risk of earthquakes at 4.6 on the Richter scale: 24 Feb 2015 read more

Shell Says Yes To Free Cash Flow, No To Debt

Callum Turcan: Nov 15, 2017

Summary

  • Royal Dutch Shell generates free cash flow in Q3.
  • Outlook for Q4, even in light of impending capex increase, looks bright due to Brent rallying.
  • Over $10 billion in net debt reduction since the end of Q3 2016.
  • Overview of Q3 results and what to expect going forward.

Royal Dutch Shell (NYSE:RDS.A) (NYSE:RDS.B) has come a long way since it bottomed out in early-2016. Its latest earnings report reinforced the notion that when Brent is trading in the $50s, Shell’s cash flow position becomes balanced. Cash flow neutrality is the key breakeven point for the industry in the current environment, as oil & gas giants need to show that they can cover capital expenditures and large dividends through organic means at realistic prices. Let’s check out how Royal Dutch Shell did in a low $50s Brent world, with an eye on organic cash inflows and outflows. read more

Shell’s LNG Strategy A Great Complement To Overall Operations

Zoltan Ban: Nov 13, 2017

Summary

  • LNG is set to see robust growth on the back of growing global dependence on natural gas. The LNG industry will provide more supply security, which will be increasingly desired.
  • Shell has become a global leader in LNG, after the BG merger.
  • The advantage of investing in Shell as a way to play the LNG growth story is the fact that its downstream segment will act as a hedge in bad times.

Beyond the recent hype created by the Saudi events, there is a trend of steady and sustainable advance in the price of oil, which I believe is likely to continue for as long as the current global economic cycle that started with the 2009 economic recovery is going to persist. In fact, I believe that the trigger for the next economic downturn will be an oil price spike, perhaps very similar to what we saw in the 2007-2008 period. This is how I saw the situation play out back in late 2015, which is when I decided to buy Shell’s (RDS.A) (NYSE:RDS.B) stock, along with Chevron (CVX) and Suncor (SU). It is a long-term bet on a trend that I am certain will happen, although the timing of it was never something I was as certain of, which is why I opted to buy only solid names, with a diverse portfolio of projects. read more

Reuters: Shell to hand over Iraq’s Majnoon oilfield by next June

Nov. 8, 2017 11:33 AM ET|By: , SA News Editor

Royal Dutch Shell (RDS.A, RDS.B) has agreed to exit Iraq’s Majnoon oilfield and hand over its operation to a state-run company by the end of June 2018, Reuters reports, citing two Iraqi oil officials.

The Iraqi officials reportedly said the deal was reached during a meeting between Shell and officials from state-run Basra Oil on Monday at the Majnoon oilfield, which currently produces ~235K bbl/day of oil.

According to the report, Shell will focus its efforts on the development and growth of Iraq’s Basra Gas Co., which is a joint venture between Shell, Mitsubishi and others. read more

Shell Swallows BG Group Whole Hog, Rolls Up Cash Flow

Ray Merola: Nov. 6, 2017

Summary

  • Shell is enjoying a remarkably successful corporate resurgence.
  • Legacy BG Group opex and capex has been absorbed entirely without a loss of combined hydrocarbon volumes.
  • Cash is king.
  • Debt is trending down.  The dividend is well-covered.  Returns are solid, and improving.
  • I remain constructive on RDS stock.

I’ve been pounding my fist on the table for Royal Dutch Shell (RDS.A) (RDS.B) for a couple of years now. It’s been that one, “fat pitch” worth waiting upon; these don’t come along very often. Since the end of 2015, ADR shares offered investors ~54% total return, or an 80% gain since the stock bottomed in January 2016.

The 3Q report included the hallmarks of recent previous quarters: linked-quarter revenue growth, continued strong cash flow, improving return-on-capital, reduced gearing, steady production, and ample dividend coverage. Details are found here. read more

Royal Dutch Shell: The Cash Machine

 Nov. 6, 2017 12:35 PM ET

Summary

  • Royal Dutch Shell has reported nearly 50% increase in profits following improvement in energy prices which fueled a turnaround of its upstream division.
  • In the first three quarters of 2017, Royal Dutch Shell generated $15.42 billion of free cash flows (ex. working cap. changes), surpassing even the industry’s cash flow king Exxon Mobil.
  • Oil prices have climbed to almost $61 a barrel and could stay at this level in the future, which could give a major boost to Shell’s earnings and cash flows.

Royal Dutch Shell (RDS.A, RDS.B) is a well-oiled cash flow machine. In fact, it generates more free cash flows than any other oil majors, and this was evident from the latest quarterly results. The Anglo-Dutch oil giant could get even better in 2018 on the back of improvement in oil prices. The company’s shares will likely move higher while its valuation might also improve.

Latest Earnings

Royal Dutch Shell has recently released blowout quarterly results in which it posted significantly higher profits following a strong performance from its upstream, downstream and integrated gas divisions. The company reported an adjusted net profit (attributable to shareholders on a current cost of supplies (CCS) basis) of $4.1 billion, up 47% from the same quarter last year. That blew past the company-provided analysts’ estimate of $3.6 billion. The profits at the upstream segment ballooned from just $4 million a year earlier to $562 million. The profits at the downstream and integrated gas segments rose 28.4% and 37.7% to $2.67 billion and $1.28 billion respectively. read more

Shell, BP, Exxon big winners in historic Brazil oil auction

Oct. 27, 2017 5:45 PM ET|About: BP p.l.c. (BP)|By: , SA News Editor

  • Brazil auctioned off six of eight exploration blocks in today’s historic opening of its coveted pre-salt offshore oil region to foreign operators, exceeding the government’s expectations with commitments for 6.15B reais ($1.88B) in signing bonuses.
  • Royal Dutch Shell (RDS.A, RDS.B) was especially active, winning stakes in half the blocks awarded and bolstering its position as the largest foreign operator in Brazil’s offshore oil sector, second only to state-run Petrobras (NYSE:PBR); Shell believes it can pump oil from the pre-salt fields at below $40/bbl.
  • BP took two blocks, including the Peroba block, which is estimated to contain 5.3B barrels of oil; it won as part of a consortium that included PBR and a Chinese group.
  • Exxon Mobil (NYSE:XOM) grabbed the Norte de Carcará block – which holds an estimated 2.2B barrels of oil, in a consortium with Statoil (NYSE:STO), which says it also sold a stake in a nearby block to XOM for $1.3B.
  • Brazil Pres. Temer says the auction will generate investments of more than 100B reais ($30B) in the country by the winning oil companies.
  • read more

    Why Shell Investors Shouldn’t Ignore The Ongoing Security Situation In Nigeria

     Oct. 4, 2017 5:28 AM ET

    Summary

    • Attacks on oil & gas infrastructure in Nigeria pose a serious risk to Royal Dutch Shell.
    • Looking at Shell’s footprint in the country.
    • How it has been impacted so far.

    Royal Dutch Shell plc (NYSE:RDS.A) (NYSE:RDS.B) is a big player in Nigeria, a country that has been dealing with increases in civil unrest and sporadic violence over the past few years, particularly from the Niger Delta Avengers group that wants a larger portion of the oil & gas tax revenue to go to the Niger Delta region. This is on top of Nigeria’s ongoing fight against the Boko Haram insurgency in the northern parts of the country. The ongoing security situation is a major risk for Shell’s Nigerian operations, especially as the Niger Delta Avengers have shown the ability to repeatedly target bottlenecks like pipelines and force a lot of output offline. Let’s dig in by first going over what’s at stake for Shell. read more

    Shell’s Floating LNG Endeavor Is About To Begin

     Oct. 2, 2017 5:45 AM ET

    Summary

    • Shell’s floating liquefied natural gas project, the Prelude FLNG venture, will come online within a year.
    • Cash flow generation expected to begin in 2018, two years later than initially planned.
    • Going over the details of Royal Dutch Shell’s Prelude FLNG development.

    Royal Dutch Shell plc (NYSE:RDS.A) (NYSE:RDS.B) is getting closer and closer to finally completing its Prelude FLNG project off the northwestern coast of Australia. FLNG stands for floating liquefied natural gas, a marine vessel that can commercialize gas finds that are too small to justify building a new onshore LNG facility to develop. Let’s dig in.

    FLNG overview

    The purpose of turning gaseous methane into liquid form is that LNG takes up 1/600th of the space as a liquid, making exports economically viable. By cooling the natural gas down to negative 260oF, Shell can economically supply gas to consumers all over the world. The real genius of FLNG vessels is the ability to fit a processing plant on a ship in a fraction of the space that conventional processing facilities take up, along with Shell’s Dual Mixed Refrigerant unit that can cool the gas down. read more

    Shell plans $1B/year toward electric vehicle charging, energy management

    |By: , SA News Editor

  • Royal Dutch Shell (RDS.A, RDS.B) is working on developing new energy technologies such as smart electric vehicle charging and models to reduce customers’ energy use, says Mark Gainsborough, head of the company’s New Energies division.
  • Goldman Sachs has predicted that oil demand could peak as early as 2024 due to the rollout of electric vehicles and rising fuel prices, and Shell says it plans to invest up to $1B/year through the New Energies division by the end of the decade as it seeks to ramp up involvement in technologies that are changing the market.
  • Gainsborough says Shell already has started to provide fast-charging for electric vehicles at its gasoline stations and is working on developing “smart charging” to help even out demand on the electricity grid.
  • read more

    Shell’s Little Talked About Permian Position

    : 27 Sept 2017

    Summary

    • Royal Dutch Shell bought into the Permian back in 2012.
    • An overview of its JV with Anadarko Petroleum Corporation.
    • Where its acreage is located.
    • Operatorship controversy and probable split from Anadarko.
    • What to expect going forward.

    Back in 2012, Royal Dutch Shell plc (NYSE:RDS.A) (NYSE:RDS.B) teamed up with Anadarko Petroleum Corporation (NYSE:APC) to develop the Permian Basin. Royal Dutch Shell plc purchased all of Chesapeake Energy Corporation’s (NYSE:CHK) 50% stake in the joint venture for just under $2 billion, a steal compared to where prices are today. Centered in the prolific Delaware Basin, this part of the Permian is home to some of the most economical unconventional horizons in the world, including the Leonard/Avalon, Bone Spring, and Wolfcamp plays. Let’s dig in. read more

    Why $55 Brent Is Big News For Shell

    : Sept 21, 2017

    Summary

    • Checking out high-yielding Royal Dutch Shell plc.
    • Brent bouncing up to over $55/barrel is big news that I think has been under-reported in the financial media.
    • Overview of Shell’s finances and significance of higher Brent prices.

    In light of material increases in realized upstream prices and an improving downstream sector, Royal Dutch Shell plc’s (NYSE:RDS.A) (NYSE:RDS.B) financials have shown tremendous improvement this year. The worst of the downturn is behind the oil sector, but keep in mind crude prices remain range-bound. That being said, with Brent (global oil benchmark) back over $55/barrel (high end of the range), things are looking brighter and brighter for Royal Dutch Shell every day. Especially when it comes to fully covering Royal Dutch Shell plc Class A and Class B shares’ lofty 6+% yields. Let’s dig in. read more

    New Gulf of Mexico fields bolster new and existing assets

    Sep. 20, 2017 7:05 AM ET: EXTRACTS FROM THE ARTICLE: “Williams’ Long-Term Gulf Of Mexico Upside”

    Royal Dutch Shell (NYSE:RDS.A) (NYSE:RDS.B) is developing the Appomattox and the Vicksburg fields with the first stage of development expected to recover 650 million barrels of oil equivalent. That includes 596 million barrels of crude and 396 billion cubic feet of natural gas, with a planned peak production rate of 175,000 BOE/d. Two tie-back opportunities, the Gettysburg and Rydberg fields, could be developed through future development schemes. read more

    Shell Is Nothing Short Of Exemplary

    Earnings Forecast Focus: Sep. 5, 2017 6:49 PM ET

    Summary

    • Shell CEO Ben van Beurden’s “lower forever” quote was aimed at operating costs and overall company culture. It does not reflect the CEO’s oil price outlook.
    • The company’s operational excellence has been nothing short of exemplary.
    • Scrip dividend will be removed when gearing is down to 20% from the current 25%.
    • At the current rate, it should take no more than twelve months to reduce the gearing to 20%.
    • Obviously, the dividend is safe. More importantly, this is an opportunity to buy a company with excellent leadership.

    Royal Dutch Shell’s (RDS.A) (RDS.B) transformation under CEO Ben van Beurden has been truly remarkable. The relatively new CEO has put his mark on the company. He has shown that Shell, under his leadership, has the ability to navigate the downturn with relative ease. Not only that, he has shown the ability to transform a company when most other companies are busy trying to survive. While I won’t be spending much time on the dividend safety, as that has been made clear over and over again, it is safe to say that the 6.6% yield is beyond safe. Investors now have the opportunity to purchase a 6.6% yield with additional capital appreciation should oil rebound. read more

    Royal Dutch Shell In The Clear

    : Aug 23, 2017

    Summary

    • Shell’s latest quarter was marked by successful cost reductions and acquisition-related synergies.
    • Shell seems to be able to meet its cash flow obligations without much trouble.
    • I recommend Shell for income investors, but with a few caveats.

    Back on May 24th I “sounded the all clear” on Royal Dutch Shell (RDS.A) (NYSE:RDS.B). Shell, I felt, would henceforth be able to pay its dividends and capital expenditure from operational cash flow. Shell’s latest quarter was another continuation of that, with ongoing synergies from the huge BG Group acquisition two years ago and also continued opex savings. Shell’s pro-forma workforce is about 30% smaller than it was in the beginning of 2016, and while that may not be good for employees who were laid off, it is a reflection of impressive modernization and productivity gains from the company itself. read more

    Shell Prepares For A Different Energy Reality

    : 14 August 2017

    Summary

    • This summer has seen the governments of several of the world’s major economies propose to eliminate internal combustion engine vehicles over the next 10-30 years.
    • At the same time, Royal Dutch Shell announced several major clean energy investments over the summer in anticipation of a drop-off in petroleum demand.
    • This article looks at how Shell’s clean energy investments fit into its energy profile forecasts compared to its peers.

    This summer has been filled with the sort of headlines that can give strategic planners in the petroleum & gas sector heartburn. One-upping Germany’s earlier non-binding pledge to ban new internal combustion engine [ICE] vehicles by 2030, the government of France’s new centrist president Emmanuel Macron announced in early July that the country will end sales of ICE vehicles by 2040. This move, which is part of that country’s efforts to comply with its greenhouse gas emission reduction target under 2015’s Paris Climate Agreement, would eliminate gasoline- and diesel-only engines and is aimed at reducing the country’s air pollution as it is at mitigating climate change. Britain intends to do the same by 2050. Even China and India, which have long been posited as important future sources of petroleum demand, are moving to electrify their vehicle fleets: China recently announced that it wants 25% of the country’s vehicles to be “alternative fuel” by 2025, while India is drafting plans to electrify all of its vehicles by 2030. read more

    Shell considers upgrade at Germany’s largest refinery

    |By: , SA News Editor:

    Royal Dutch Shell (RDS.A, RDS.B) says it is considering expanding capacity at its 140K bbl/day refinery at Wesseling, Germany, which together with the former Godorf refinery near Cologne-Godorf form its 325K bbl/day integrated Rheinland refinery, the largest in Germany.

    Shell says an expansion would be part of a series of measures aimed enabling production of fuels that will conform to the International Maritime Organization’s more stringent maximum permitted sulfur levels for marine fuels taking effect in 2020.

    The company has not disclosed a time frame for when it might make a decision about the possible expansion.

    SOURCE

    Shell Set To Play A Major Role In The Global Gas Market

    Zoltan Ban: Aug. 3, 2017 6:55 PM ET

    Summary

    – Shell profits down compared with the previous quarter, which is in part a reflection of the lower oil prices.

    – While the shorter-term results were affected by the falling oil price, the long term strategy of becoming a leading and dominant player in LNG remains intact.

    – Global energy trends continue to suggest that LNG is a good long-term bet, given economic as well as environmental considerations.

    While Shell (RDS.A) did report a second quarter net operating profit of $1.55 billion compared with $3.5 billion in the previous quarter, it should be noted that when looking at the different sectors, it is the downstream segment which has been helping it stay above water this year. The upstream segment seems to be struggling within the context of the current oil & gas price environment, same as we can expect the global oil & gas industry to do overall. read more

    Russian pipeline projects likely to go ahead despite sanctions, analysts say

    Aug. 3, 2017 11:49 AM ET|By: , SA News Editor

    New U.S. sanctions will make it harder and more expensive for Russia to build the Nord Stream 2 and TurkStream gas export pipelines to Europe, but analysts say the two Gazprom-led (OTCPK:OGZPY) projects are unlikely to be stopped.

    But the sanctions bill, which had the overwhelming support of the U.S. Congress before it was signed by Pres. Trump, throws into doubt the €4.75B pledged by European companies including Royal Dutch Shell (RDS.A, RDS.B), Engie (OTCPK:ENGIY) and OMV (OTCPK:OMVJF) to help fund Nord Stream 2 and could threaten other projects. read more

    Royal Dutch Shell Gearing Up To Stay ‘Fit For The Forties’

    By Aisha Rahman: Jul. 31, 2017 6:49 PM ET

    Summary

    Q2 2017 saw better YoY profits. However, the same cannot be said for QoQ results, due to lower oil prices in Q2.

    There were notable improvements in the cash flow position, and I expect this trend to continue on for the rest of the year.

    As the company gears up to stay “resilient to market changes,” it is seeking to control its cost lines and step into the renewable energy business.

    I had written an earnings preview on Royal Dutch Shell (NYSE:RDS.A) (NYSE:RDS.B) a few days before the company posted its Q2 results for the year. I decided to do a spin-off article to that in response to their earnings announcement for the quarter, and talk about the tone the company has set for the rest of the year. read more

    Who Stands To Gain The Most From Oil’s Rise In Price?

    : 20 July 2017

    Summary

    *Five of the largest oil sector firms all move directly with the price of oil, but at varying degrees.

    *ConocoPhillips has historically moved at an almost dollar per dollar ratio to oil.

    *Shell and BP are far less sensitive to the change in oil prices as their American counterparts.

    *BP has a quarter of the sensitivity to the price of oil as ConocoPhillips does.

    By Eric Mason

    As oil approaches its consensus floor for price per barrel, the next move can only be upwards. To take advantage of this pending uptick, which of the major oil sector firms offers the best growth relative to the price of oil? This article will help shine some light on which stock is the best pick for gains. read more

    Critics argue for Groningen shutdown at Dutch court hearing

    Jul. 13, 2017 2:59 PM ET|By: , SA News Editor

    Angry Dutch residents living near the huge Groningen gas field told a hearing today at the Netherlands’ highest court that production should be totally stopped, accusing oil companies of causing minor earthquakes and the government of lying.

    The Council of State is holding two days of hearings to consider appeals against a government plan to cut production at the field by an additional 10% starting Oct. 1.

    Gas production company NAM, a joint venture between Royal Dutch Shell (RDS.A, RDS.B) and Exxon Mobil (NYSE:XOM), has accepted responsibility for damage caused by the quakes, for which it is paying more than €1B. read more

    Royal Dutch Shell: Talking The Talk, But Walking The Walk?

    : July 12, 2017

    Summary

    • CEO Ben van Beurden reinforces Shell’s readiness to play its part in achieving Paris agreement targets, but execution on this goal unclear.
    • Shell to acquire Texas company MP2 Energy, which has renewable energy and demand response focus.
    • Shell endorses Task Force on Climate-related Financial Disclosures report.

    There is massive change happening in the transition from fossil fuels to renewable energy in the power and transport industries. While the major oil and gas companies have acknowledged the change, apart from Total (NYSE:TOT) there is little indication that other oil companies Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX) or BP (NYSE:BP) have concrete plans to change quickly. Here I consider whether Royal Dutch Shell (NYSE:RDS.A)(NYSE:RDS.B) is getting serious about the change.

    All of the oil and gas majors are under pressure, but Shell is particularly challenged as its debt has blown out due the acquisition of BG Group for $50 billion. A key part of the next steps involves debt reduction through divestment. The BG investment could prove problematic as the world is awash with new LNG projects coming on stream. For the last 3 quarters it could pay its high dividend (6.9%) from free cash flow, but this was in an environment where the Brent price was $54/barrel. This can’t continue if the oil price stays where it is now. So it is a pretty challenging time for Shell. read more

    How Safe Is The Dividend Of Royal Dutch Shell?

    How Safe Is The Dividend Of Royal Dutch Shell?

    : July 10, 2017

    Summary

    *Royal Dutch Shell has not cut its dividend since World War II.

    *However, its dividend growth rate has been lackluster at best during the last decade.

    *Its dividend payout ratio is remarkably high while its net debt has almost doubled during the last 4 years.

    *On the other hand, the company intends to sell $25 B of assets this and next year.

    While Royal Dutch Shell (RDS.A) (NYSE:RDS.B) has retrieved half of its losses since it bottomed early last year, it is still 25% lower than its peak three years ago, just before the collapse of the oil price began. As the downturn in the oil market has already lasted longer than initially anticipated, with no light on the horizon yet, the shareholders of the stock are still in pain. Therefore, given that the generous dividend of the stock is the only consolation to the shareholders, it is important for them to evaluate how safe the dividend is. read more

    Eventual Groningen shutdown can’t be ruled out, hitting Exxon, analyst says

    Jul. 5, 2017 11:40 AM ET|About: Exxon Mobil Corporation (XOM)|By: , SA News Editor

    Exxon Mobil’s (XOM -1.4%) organic growth could be hurt by problems at the Groningen gas field it shares with Royal Dutch Shell, as production caps caused by rising earthquakes in the region eventually could even lead to a total shutdown, says Raymond James analyst Pavel Molchanov.

    “An eventual field shutdown, which cannot be ruled out, would erase nearly all of Exxon’s organic growth through 2020,” Molchanov writes, seeing little chance that the top Dutch administrative court will grant the oil companies’ appeal against the most recent strict cuts. read more

    Shell says Geismar olefins expansion project still on schedule

    |By: , SA News Editor

    Royal Dutch Shell (RDS.A, RDS.B) says it remains on schedule in the construction of its $717M project to increase alpha olefins production at its Geismar, La., chemical manufacturing plant, which will become the world’s largest AO production site.

    Shell says the 425K metric tons/year AO unit, which will join three existing units at the site, will begin commercial production by year-end 2018.

    Shell plans to supply the Geismar expansion with ethylene feedstock from its nearby Norco, La., and Deer Park, Tex., manufacturing sites, which would bring total AO production at Geismar to more than 1.3M tons/year. read more

    Shell: Executing On Its Plan But No Upside In The Stock Price

    By : May 31, 2017

    Royal Dutch Shell (RDS.A, RDS.B) suffered a dramatic drop in earnings and cash flow in 2015 and 2016, as crude oil prices fell from about $100 per barrel to about $50 barrel in the second half of 2014.

    From $14.7 billion earnings in 2014, Shell’s earnings fell to $2.2 billion for 2015 and $4.8 billion in 2016. In response, Shell embarked on a strategic transformation of their entire company, of which the key cornerstones were:

    • Completion of the acquisition of BG;
    • Divestment of in assets;
    • Bringing new production online for ongoing projects;
    • Realizing operating cost reductions; and
    • Reducing debt.

    My analysis of their financials show that while they are on track to achieve their plan, investors should not expect dividend increases through 2020. In this article, I will review the impact of the divestments on the balance sheet and the required run-rate free cash flow that Shell will need to deliver on its financial strategy. I conclude that the dividends are safe, but share price appreciation will be limited. read more

    Shell, Aramco divide up Motiva JV assets

    |By: , SA News Editor

    Royal Dutch Shell (RDS.A, RDS.B) and Saudi Aramco complete the separationof the assets, liabilities and businesses of their U.S.-based refining and marketing joint venture.

    Shell now holds sole ownership of the 235K bbl/day Norco refinery, where subsidiary Shell Chemical already operates a petrochemical plant, and the 242,250 bbl/day Convent refinery, which Motiva previously said will be integrated to create the Louisiana Refining System, as well as 11 distribution terminals. read more

    Reuters: Shell testing Nigeria’s Forcados oil pipeline for restart

    |By: , SA News Editor

    Royal Dutch Shell (RDS.A, RDS.B) is testing Nigeria’s Trans Forcados crude export pipeline for a potential restart, with the Astro Perseus tanker expected to load the first cargo by the weekend, Reuters reports.

    Forcados had produced 200K-240K bbl/day before attacks damaged the pipeline in February 2016 and again in October.

    A full resumption of Forcados could complicate matters for OPEC, which meets later this month to determine whether to extend production cuts beyond June, or potentially deepen them; Libya and Nigeria were exempt from the original cuts. read more

    Bloomberg: Shell to cut bidders to three for Argentina assets

    May 3, 2017 5:47 PM ET|By: , SA News Editor

    Royal Dutch Shell (RDS.A, RDS.B) plans to focus on three bidders this month for its downstream oil assets in Argentina after drawing eight non-binding bids of $1B-$2B, Bloomberg reports.

    The shortlisted suitors will enter the next phase of the sales process in the next 2-3 weeks, with Chile’s Grupo Luksic among the most appealing of the companies making offers, according to the report.

    Shell put the assets, which include an oil refinery near Buenos Aires and ~600 refueling stations, up for sale earlier this year after a strategic review under the company’s $30B divestment plan to reduce debt. read more

    Support grows for Australian cross-continent pipeline to combat gas shortages

    Apr. 19, 2017 12:42 PM ET|By: , SA News Editor

    Australia’s government may support construction of a 1K-mile gas pipeline likely to cost more than A$5B (US$3.8B), WSJ reports, amid growing concern about shortages of liquefied natural gas and blackouts on the country’s populous eastern seaboard.

    Two senior ministers expressed support for a transcontinental pipeline as Prime Minister Turnbull met with major LNG exporters including Royal Dutch Shell (RDS.A, RDS.B), Exxon Mobil (NYSE:XOM) and Santos (OTCPK:STOSF) to discuss ways of getting more LNG into the domestic energy market. read more

    Dutch to cut Groningen gas production to lower earthquake risk

    Apr. 18, 2017 12:56 PM ET|By: , SA News Editor

    The Netherlands will cut production of its Groningen gas field by 10% beginning in October to limit the risk of earthquakes, the country’s economy minister says.

    Production would be reduced to 21.6B cm/year from 24B cm/year as a first step, according to the minister; output has been cut several times from 53.9B cm in 2013 as criticism mounted the Dutch government had failed to adequately assess the risk from earthquakes caused by production at Europe’s biggest field.

    Groningen is operated by a joint venture between Royal Dutch Shell (RDS.A, RDS.B) and Exxon Mobil (NYSE:XOM). read more

    Shell wants Dutch government to target 20 GW in offshore wind by 2030

    Apr. 13, 2017 8:25 AM ETBy: , SA News Editor

    Royal Dutch Shell (RDS.A, RDS.B) says it has urged the Dutch government to come up with bolder offshore wind targets and quadruple the goal for installed capacity to 20 GW by 2030.

    Shell, which has traditionally invested little in green energy sources, is ramping up renewable energy investments to $1B/year by the end of the decade after pressure from shareholders.

    Some of the company’s recent activities in renewable energy include winning a contract leading a consortium to build a wind farm off the coast of the Netherlands and bidding for an offshore wind license in the U.S. read more

    Royal Dutch Shell: Unsustainable

    Quad 7 Capital: Apr. 6, 2017 12:43 PM ET

    Royal Dutch Shell (NYSE:RDS.A) (NYSE:RDS.B) has been a name of controversy of late. Why? Well, this is an oil stock and oil prices have meandered. While shares are up substantially off of their multi-year lows seen a year ago, this stock still yields 7%. The dividend payment is the center of most controversy, with so many feeling it is unsustainable. That is what I keep hearing. Unsustainable. They tell me Shell is ‘unsustainable’ at $40 oil. They tell me the dividend is most certainly ‘unsustainable’ in the current climate. Some go so far as to say the entire oil industry is ‘unsustainable.’ read more

    FT: Shell’s top oil trader defends North Sea Brent activity


    Mar. 29, 2017 12:57 PM ET|By: Carl Surran, SA News Editor

    Royal Dutch Shell’s (RDS.A, RDS.B) VP of crude oil trading is out with a strong defense against accusations that the company’s activity in the North Sea crude market has skewed the benchmark Brent contract that underpins global oil prices.

    Shell allegedly traded very aggressively in the region during 2016, with large positions in North Sea crude at times running contrary to clear signs of oversupply in the market, with the buying spree seen potentially pushing up prices. read more

    OPEC Has To Extend Cuts – Shell Will Benefit Strongly From The Action

    Gary Bourgeault: 28 March 2017

    One of the best things to happen to the U.S. shale industry was the plunge in the price of oil. It caused creative companies with good management to aggressively pursue ways of slashing costs, while at the same time improving productivity.

    A number of the pure plays like EOG Resources (NYSE:EOG) have been able to significantly improve efficiencies, to the point EOG can generate a 30 percent return when oil is at $40 per barrel. Lately, major producer Royal Dutch Shell plc (NYSE:RDS.A) (NYSE:RDS.B) has taken a larger position in shale, and says new wells in its Permian holdings can generate a profit at $20 per barrel. Overall, it can make money when oil is at $40 in the Permian. read more

    Shell says to start cleaning up 2008 Nigeria oil spills in April

    Mar. 24, 2017 2:19 PM ET|By: Carl Surran, SA News Editor

    The head of a group helping organize Royal Dutch Shell’s (RDS.A, RDS.B) clean-up of 2008 oil spills at a Nigerian Delta community says he hopes work can begin next month.

    Shell agreed in 2015 on a £55M ($68.6M) settlement with the Bodo community after accepting liability for two pipeline leaks, but it says members of the community denied it access in August 2015 when clean-up work was set to begin.

    A WSJ report yesterday said the Shell spills had contributed to “astonishingly high” pollution levels in the area, citing a consultant who helped produce a confidential damage assessment. read more

    WSJ: Shell report cites “astonishingly high” pollution from Nigerian oil spills

    The former director of the cleanup project says Shell has denied him permission to publish the study’s results, which dictated a need for health screenings in the Bodo community.

    Mar. 23, 2017 5:19 PM ET|By: Carl Surran, SA News Editor

    Royal Dutch Shell (RDS.A, RDS.B) oil spills that have not been cleaned up for more than eight years have contributed to “astonishingly high” levels of pollution in a Nigerian community, WSJ reports, citing a consultant who helped produce a confidential damage assessment for the company and its partners.

    The former director of the cleanup project says Shell has denied him permission to publish the study’s results, which dictated a need for health screenings in the Bodo community. read more

    Shell leads more active Gulf of Mexico federal oil lease sale

    Mar. 22, 2017 6:35 PM ET|By: Carl Surran, SA News Editor

    Royal Dutch Shell (RDS.A, RDS.B) led the way in today’s federal offshore lease sale in the Gulf of Mexico, which drew $275M in high bids following years of declining offshore interest that dates back before the downturn in oil and gas prices.

    Shell made 20 bids totaling $55.9M, including the single highest apparent bid of $24.1M on Atwater Valley Block 64; Statoil (NYSE:STO) counted 13 apparent high bids totaling $44.5M, and Hess (NYSE:HES) ranked third with 12 apparent high bids totaling $43.9M. read more

    Shell cancels Prince Rupert LNG project, to move forward on Kitimat project

    Mar. 13, 2017 1:36 PM ET|By: Carl Surran, SA News Editor

    Royal Dutch Shell (RDS.A, RDS.B) says it is ending development of its proposed Prince Rupert liquefied natural gas project in British Columbia but is still considering the potential of its other Pacific coast LNG option.

    Prince Rupert LNG was part of a portfolio of projects acquired in the takeover of BG Group last year, but Shell says the project no longer stacks up against existing options.

    Shell said it continues to actively move forward on the proposed Kitimat LNG Canada project in B.C. with its partners, even though last year it indefinitely deferred a final investment decision on it because of market conditions. read more

    Royal Dutch Shell: A Lot Of Debt

    Brandon Dempster: Jan 19, 2017

    Royal Dutch Shell (RDS.A, RDS.B) has a sizeable debt wall ahead of them. With nearly $20 billion in debt due over the next five years, this company is going to have to be firing on all cylinders in order to not just meet these principal repayments, but to generate enough cash flow to fund the sizeable dividend, boost capital expenditure per the company’s Q3 2016 guidance, and still remain in positive free cash flow territory. It’s important that investors take a tough look at the debt due this year and understand the company’s current liquidity position. read more

    Dutch court upholds Groningen gas production cap

    Jan. 5, 2017 2:28 PM ET|By: Carl Surran, SA News Editor

    A Dutch court today upheld a government decision to cap production at the Groningen gas field at 24B cm until Oct. 1, 2021, a step aimed at easing the risk of earthquakes triggered by drawing gas from the field.

    The court was responding to requests for a preliminary injunction against the June decision, opposed by groups who sought a halt or a deeper cut to production at Groningen.

    Output has been cut several times from 53.9B cm in 2013 amid criticism that Dutch authorities had failed to adequately assess the risk to citizens from earthquakes caused by gas production. read more

    Royal Dutch Shell: Prepare For Strong Upside

    Dec. 29, 2016 3:08 AM ET

    Summary

  • Royal Dutch Shell will report strong growth in the cash flow in the long run as it brings online low-cost production with cash operating costs of just $15/barrel.
  • In a $60 oil price environment, Shell’s free cash flow is expected to grow to $25 billion in 2020 as compared to $12 billion at a price of $90/barrel earlier.
  • Due to the growth in the free cash flow and low capital expenses as more projects come online, Shell’s operating cash flow will grow to $50 billion in 2020.
  • At an operating cash flow of $50 billion and a price to cash flow ratio of 15, Shell’s market capitalization is set to triple in the coming four years.
  • read more

    Royal Dutch Shell – Income Investors Should Look Elsewhere

    Casey Hoerth: Dec. 14, 2016 11:09 AM ET

    Summary

    Shell plans on between $25 billion and $30 billion in capex next year, with flexibility to the downside.

    I do not expect Shell to achieve cash flow balance in 2016, even with asset sales.

    I continue to recommend other energy companies over Royal Dutch Shell, until either oil prices recover more or until Shell does something else to achieve balance.

    Over the course of 2016 I haven’t recommended much when it comes buying to upstream or integrated oil companies. The reason was that I felt many still weren’t doing enough to balance their money coming in versus money going out. The CEO of one of my favorite companies, in their latest analyst day, recently quipped that energy companies couldn’t afford to wait to be ‘bailed out’ by higher oil prices. read more

    Noble Corp. sinks as Shell idles two drillships

    Dec. 12, 2016 11:56 AM ET|By: Carl Surran, SA News Editor

    Royal Dutch Shell (RDS.A +1.3%) says it is idling two Noble Corp. (NE -3.7%) ultra-deepwater drillships, citing the current, challenging environment for offshore exploration and production projects.

    Shell says it will idle the Noble Globetrotter II for up to two years, starting in January, during which it will pay a negotiated dayrate of $185K, and idle the Noble Bully II for up to a year at a negotiated dayrate of $200K.

    The primary term for the Noble Bully II, Noble Globetrotter I and Noble Globetrotter II are unchanged, with contracts expected to conclude in April 2022, July 2022 and September 2023, respectively. read more

    Shell, Total to sign oil deals with Iran

    Dec. 7, 2016 5:48 AM ET| By: Yoel Minkoff, SA News Editor

    Royal Dutch Shell (RDS.A, RDS.B) and Total (NYSE:TOT) will signinitial agreements today to develop oil and gas fields in Iran, in the first European petroleum deals in the country since sanctions eased earlier this year.

    But the plans open both companies to potential risks from the incoming Trump administration.

    Though Total is French and Shell is jointly headquartered in London and The Hague, both companies have substantial American operations. read more

    FT: Western oil companies reach $5B deal with Nigeria

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    Nov. 8, 2016 10:23 AM ET|By: Carl Surran, SA News Editor

    Nigeria’s government has reached an outline settlement to resolve a dispute with western energy firms that would pay the companies $5B to cover exploration and production joint venture costs in the country, Financial Times reports.

    Nigeria’s petroleum minister tells FT that Royal Dutch Shell (RDS.A, RDS.B), ExxonMobil (NYSE:XOM), Eni (NYSE:E), Chevron (NYSE:CVX) and Total (NYSE:TOT) accepted the settlement of costs incurred during 2010-15, and hopes a deal can be finalized by year-end. read more

    Royal Dutch Shell: The Comeback Is Here

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    Alpha Investor: Sunday Nov 6, 2016

    Summary

    • Shell posted a massive turnaround in its bottom line last quarter on the back of an improved production profile, lower costs, and higher price realizations.
    • Shell’s financial improvement is set to continue going forward as upstream oil price realizations will continue to improve on the back of a positive demand-supply environment in the oil industry.
    • Oil demand has exceeded supply by 500,000 bpd this year and the trend will continue as the likes of Russia, Saudi Arabia, and the U.S. continue to reduce output.
    • Shell’s focus on lowering both operating and capital costs will allow it to attain break-even point even if oil prices remain at $50/barrel, which will also improve cash flow.

    On Tuesday last week, Royal Dutch Shell (NYSE:RDS.A) (NYSE:RDS.B) reported impressive results for the third quarter. In fact, Shell was able to achieve a major turnaround in its bottom line performance, posting a profit of $1.4 billion as compared to a huge loss of $6.1 billion in the same quarter last year. This impressive turnaround in Shell’s bottom line was a result of an increase in production as compared to the prior-year period, driven by the acquisition of BG that led to a favorable production mix in the upstream segment. read more

    Royal Dutch Shell’s Realistic View On Oil Shows Why It Is The Best Oil Major

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    screen-shot-2016-10-20-at-23-00-27Nov. 4, 2016 4:19 AM ET

    Summary

    • Royal Dutch Shell CFO Simon Henry just forecast that global demand for oil could peak within the next 5 to 15 years and then decline.
    • This is surprising coming from an oil company executive, and runs counter to typical industry projections such as ExxonMobil’s that demand will grow 20% by 2040.
    • Shell will shift their focus to natural gas, biofuels, and hydrogen, in order to be “the energy major of the 2050s”.
    • I like Shell’s perspective a lot: It gives them multiple paths to success. Of course they will still be just fine if oil demand does keep growing.
    • But if Shell is right, they will be ready and their management decisions over the next 5 to 15 years will be two steps ahead of everyone else’s.

    On its earnings conference call this week, Royal Dutch Shell (NYSE: RDS.A) (NYSE: RDS.B) made a suprising commentary on its perspective for the global oil market over the next two decades: Its CFO Simon Henry forecast that global demand for oil could peak within the next 5 to 15 years and then decline.

    Such an apparently pessimistic and bearish forecast is not what you usually expect to hear from a major oil company executive, to say the least. As the article pointed out, ExxonMobil’s (NYSE:XOM) annual outlook makes a more typical projection for the industry: about a 20% increase in global oil demand from 2014 to 2040. read more

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