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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

    Shell swings to a profit, outlook uncertain

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    screen-shot-2016-10-20-at-23-00-27Nov. 1, 2016 4:30 AM ET|By: Yoel Minkoff, SA News Editor

    “Shell delivered better results this quarter… but lower oil prices continue to be a significant challenge across the business, and the outlook remains uncertain,” Chief Executive Ben van Beurden said in a statement.

    Earnings on a current cost of supplies basis reached $1.4B in Q3, after contracting $6.1B in the same period a year ago, as higher production from acquisition BG Group and lower operating costs helped support earnings. read more

    Royal Dutch Shell – Additional Divestments In Order To Sustain The Dividend

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    Oct. 21, 2016 10:17 AM ET

    Summary

    • Shell is announcing further divestments, this time selling part of its shale operations in Canada.
    • These moves do little to address the giant debt load, although they allow for cash flow neutrality this year.
    • Asset sales, resulting in smaller operations, combined with shareholder dilution hurt the long term potential as management stubbornly tries to preserve the dividend.

    Royal Dutch Shell (RDS.A) announced another round of divestments in order to keep leverage under control, even as oil prices have rebounded a bit in recent times. These modest divestments are countercyclical and hurt production quite a bit in relation to the proceeds. At best cash outflows come to a standstill this year following these moves, although they result in a smaller business going forward, while investors see dilution of the shareholder base in order to sustain the unsustainable dividend. read more

    Fitch: Batteries could be key disruptor to oil industry in “investor death spiral”

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    Oct 18 2016, 12:45 ET | By: Carl Surran, SA News Editor

    Oil producers such as ExxonMobil (NYSE:XOM), Chevron (NYSE:CVX) and Royal Dutch Shell (RDS.A, RDS.B) must prepare for radical change as adoption of new technologies like electric cars could happen faster than originally anticipated, according to a new report from Fitch Ratings.

    “Widespread adoption of battery-powered vehicles is a serious threat to the oil industry,” and an acceleration of the electrification of transport infrastructure could create an “investor death spiral” as investors flee the oil patch, Fitch warns. read more

    Shell says it remains committed to Showa Shell stake sale despite hangup

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    Oct 13 2016, 14:58 ET | By: Carl Surran, SA News Editor

    Royal Dutch Shell (RDS.A, RDS.B) says it remains committed to selling the majority of its stake in Japanese venture Showa Shell to refiner Idemitsu after the Japanese entities announced an indefinite delay of a planned merger.

    The founding family of Idemitsu, which controls a 33.9% stake in the refinery, opposes the merger, although the company says it has not changed its plan to buy a one-third stake in Showa Shell for ~¥170B ($1.7B) this month or next. read more

    Royal Dutch Shell: The Turnaround Will Continue

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    screen-shot-2016-10-06-at-13-11-55Alpha Investor: 12 October 2016

    Summary

    Royal Dutch Shell shares have received a boost in the past month on the back of an improvement in oil prices, a trend that is likely to continue.

    There was excess oil demand of 500,000 bpd in the third quarter as against supply due to production cuts across the globe and robust demand, leading to an inventory correction.

    Oil prices will rise further as Saudi Arabia, Russia, and the U.S. are all intent on reducing the industry oversupply, which will lead to further inventory declines. read more

    Outlook For Shell Mixed – Caution Ahead

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    Gary Bourgeault: October 7, 2016

    Summary

    • Debt load associated with BG Group acquisition still weighs heavily on Shell.
    • With a larger percentage of its business gas, it continues to struggle to sustainably break the $3 barrier.
    • EPS will probably drop by over 40 percent for the year.
    • Nigerian asset sales and risks to other holdings in the nation remain a concern.
    • Dividend could remain at current level if the price of oil and gas maintain a higher bottom.

    Royal Dutch Shell plc (NYSE:RDS.A) has been taking some good steps to prepare for what it believes will be a strong future for LNG demand, as it puts various pieces of its infrastructure in place around the world. It has the goal of continuing to focus primarily on gas as its major product, looking for a time when it sustainably rebounds in price.

    The long term prospects for Shell look fairly solid, but it does face some significant headwinds in the short term, including the debt overhang coming from its acquisition of BG Group, downward pressure on earnings per share (NYSEARCA:EPS), prolonged period of lower natural gas prices, and the loss of revenue from asset sales in Nigeria, along with the risk in the country for other projects it still has there. read more

    Oil: OPEC Finally Agrees And Investor Takeaways

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    Dividend Income: 5 October 2016

    Summary

    • OPEC has agreed to put a ceiling on oil production at 32.5 million barrels per day, representing a 900k cut from its current output at 33.4 million.
    • The news supported oil’s rise by nearly 10 percent, and benefits some companies significantly more than others.
    • The author still recommends to stay away from offshore, but upstream producers with lower break even cost could be an attractive investment. Integrated majors’ dividends are also safer than ever.

    News Summary

    To the surprise of everyone, the Organization of Petroleum Exporting Nations (OPEC) has agreed to put a ceiling on oil production at 32.5 million barrels per day, which is significantly less than its current 33.4 million barrels per day of production. The news has helped oil price rally nearly 10% to almost $51.50 per barrel Brent.

    In this article, I will try to dissect the news and its effect on integrated majors, upstream producers and offshore producers. Of course, the news benefit some of these companies significantly more than others, which are actually unaffected or evenly negatively affected by the news. Similarly, I will analyze how it will affect the United State Oil ETF (NYSEARCA:USO) and other oil related ETFs going forward. read more

    Nigeria sues oil companies for $12.7B over “illegal” oil exports

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    Sep 20 2016, 15:19 ET | By: Carl Surran, SA News Editor

    Nigerian officials say the government is suing several major oil companies for $12.7B of oil that allegedly was exported illegally to the U.S. during 2011-14.

    The Federal High Court in Lagos begins hearings next week in cases filed against Nigerian subsidiaries of Chevron (NYSE:CVX), Royal Dutch Shell (RDS.A, RDS.B), Eni (NYSE:E), Total (NYSE:TOT) and Petrobras (NYSE:PBR).

    The officials say the government alleges that the companies did not declare more than 57M barrels of crude oil shipments. read more

    What Is Really Pushing Oil Prices Down?

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    Gaurav Agnihotri: 19 Sept 2016

    Oil prices fell last week after the IEA and OPEC reported in their respective oil market reports that the supply-demand rebalancing of oil will take longer than market expectations. The WTI (WTI) and Brent were down by almost 2% and were trading at $43.3 and $45.77 at the time of writing this article. Even the U.S rig count increased for the 12th week in a row. Oil prices are going down as markets have realized that global oil supplies are only going to increase in the coming time. “It really looks similar to the period of the early 1990s, when we were at $20 oil. Is $45 to $50 the new $20? I am not ready to say we are in this new equilibrium environment, but it sure does feel like we’re moving in that direction,” said the head of commodities research at Goldman Sachs (NYSE:GS), Jeff Curie. It must be noted that investment firms such as Goldman Sachs have started lowering their 2017 forecast for oil prices. Let us look at those factors that are putting downward pressure on oil. read more

    What Royal Dutch Shell Is Doing To Solve LNG’s Biggest Challenge

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    By Gary Bourgeault: 19 Sept 2016

    There is one basic thing Royal Dutch Shell (NYSE:RDS.A) (NYSE:RDS.B) needs to do to take full advantage of its LNG strategy, and that is to boost demand by increasing the number of fueling stations in the markets they’re competing in.

    It has been marketing its LNG brand for some time, but it hasn’t had the desired impact in the short term because the infrastructure isn’t in place to respond to demand. If it can’t service demand than marketing efforts are underwhelming to say the least. read more

    Royal Dutch Shell: An Unsustainable Dividend

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    Jesse Moore: Sept 15, 2016

    Summary

    • Shell is funding its dividend and capital expense programs through a combination of debt and asset sales.
    • Those assets are operating, economic assets that provide long-term value to the company under its assumptions.
    • Shell has one year of leeway at current prices to fund its dividend after that rising debt will put too much pressure on the companies balance sheet.
    • Since I have a negative outlook on prices till at least 2018, I expect a Shell dividend cut in the first half of 2017.
    • Adding to the long list of resource companies with debt-funded dividends, we have Royal Dutch Shell (RDS.A, RDS.B). With a current yield of nearly 8%, and assuming you knew nothing about oil and gas, you could reasonably conclude this company is in peak operating condition. Unfortunately for investors, that story would be far from true.

    Capital Expense – Free Cash Gap Growing

    Many Shell investors focus on the stability of the dividend as a hallmark of the stock. Those investors are seemingly immune to what the balance sheet, cash flow statement tell us. As the company has pushed towards gas and is being pushed by its investors towards renewables, the capital expense bills have piled up. Throughout the oil downturn, Shell has hardly reduced capital expense in line with free cash flow – a result of long-term project planning that cannot be reined in. read more

    Groningen gas demand seen falling sharply

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    Screen Shot 2016-09-01 at 08.40.08Groningen gas demand seen falling sharply

    The Netherlands has been forced to scale back production at Groningen, which once supplied 10% of European Union gas requirements, to 24B cm/year due to damage from earthquakes.

    Sep 13 2016, 08:31 ET | By: Carl Surran, SA News Editor

    Demand for gas from the Groningen field in the Netherlands will fall sharply from 2020 as production is reduced, Economy Minister Kamp says in a letter to the Dutch parliament.

    The Netherlands has been forced to scale back production at Groningen, which once supplied 10% of European Union gas requirements, to 24B cm/year due to damage from earthquakes.

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

    Report: Shell considering sale of 600 Argentina gas stations

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    Sep 8 2016, 08:38 ET | By: Carl Surran, SA News Editor

    Royal Dutch Shell (RDS.A, RDS.B) is considering selling ~600 gas stations in Argentina as part of a strategic review of its downstream assets in the country, Business Times reports.

    Shell CEO Ben van Beurden said at a conference in New York yesterday that the company is in the middle of a strategic review of its downstream assets in Argentina as part of a $30B divestment program.

    Shell has market share of 19% in Argentina for gas stations, making it the second biggest seller after state-owned YPF. read more

    Shell Midstream Partners – Reliable Yield During The Downturn

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    Shell Midstream Partners IPO – Bidness ECT

    The Value Portfolio: Sept 2, 2016

    Shell Midstream Partners (NYSE: SHLX) is a master-limited partnership formed by Royal Dutch Shell (NYSE: RDS.A) (NYSE: RDS.B). The company was formed for the purpose of purchasing midstream assets and renting them out for reliable fee-based income. This fee-based income provides investors with a secure dividend which currently amounts to more than 3% and has a strong history of growth.

    Shell Midstream Partners has had a difficult time recently, though not as a difficult of a time as all the other oil companies. Since mid-2015, when other midstream companies such as Kinder Morgan (NYSE: KMI) began to take a big hit, Shell Midstream Partners has seen its stock price drop from almost $48 per unit to just over $30 per unit, a drop of almost 40%. This drop means that Shell Midstream Partners has seen its yield almost double to more than 3% per unit. read more

    Shell Sells Gulf Of Mexico Asset, But Faces A Tough Road Ahead

    Screen Shot 2016-08-31 at 23.13.17Sarfaraz A. Khan: Aug. 31, 2016 3:20 PM ET

    Summary

    • Royal Dutch Shell has agreed to sell its Brutus/Glider assets in the U.S. GoM to EnVen Energy for $425 million in cash.
    • The asset sale is a small step in the right direction which will improve Shell’s cash reserves.
    • The company, however, has made little progress toward achieving its target of selling $6Bn to $8Bn assets this year and $30Bn by 2018.

    Royal Dutch Shell (RDS.A, RDS.B) has recently agreed to sell its Brutus/Glider assets in the U.S. Gulf of Mexico to Houston-based EnVen Energy for $425 million in cash. Shell was pumping 25,000 barrels of oil per day from these offshore properties, which was equivalent to 5.8% of the oil giant’s Gulf of Mexico production or less than 1% of its total production.

    The asset sale is a small step in the right direction which will improve Shell’s cash reserves which stood at $15.2 billion at the end of June. Shell intends to sell $6 billion to $8 billion of assets this year. Overall, the company aims to dispose $30 billion of assets, spread in 5 to 10 countries and representing 10% of its production, by 2018. That will allow the company to reduce its debt which has ballooned following the $53 billion takeover of BG Group. read more

    Shell’s U.S. oilfield sale may bode well for disposal program

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    …analysts also say further deals may prove harder to clinch

    Aug 30 2016, 11:47 ET | By: Carl Surran, SA News Editor

    Analysts say Royal Dutch Shell’s (RDS.A, RDS.B) first oilfield sale after its BG Group acquisition bodes well for its sale talks in the North Sea, Gabon and New Zealand, signaling that buyers will meet the company’s expectations on value.

    The $425M sale of the Brutus/Glider fields has an implied oil price of ~$60/bbl, more than $10/bbl above current prices, according to UBS analysts who say “we may now be entering a period where both buyer and seller can see acceptable relative value, unlocking the A&D [acquisition and divestiture] market.” read more

    Reuters: Partial restart of Motiva Convent hydrocracker seen by year-end

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    Aug 22 2016, 14:58 ET | By: Carl Surran, SA News Editor

    Motiva Enterprises’ 235K bbl/day Convent, La., refinery plans a partial restart of the heavy oil hydrocracking unit by year-end, but full production is not expected to return before fall 2017 as repairs are made from the Aug. 11 fire, Reuters reports, citing Gulf Coast market sources.

    In addition to extensive repairs required to return the 45K bbl/day hydrocracker, Motiva will revamp the unit during the shutdown for the planned linking of the Convent refinery with the company’s refinery in Norco, La., sometime next year, according to the report. read more

    Fire causes evacuation of Motiva refinery in Louisiana

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    Fire causes evacuation of Motiva refinery in Louisiana

    Aug 11 2016, 16:39 ET | By: Carl Surran, SA News Editor

    A large fire at the 235K bbl/day Motiva Enterprises refinery in Louisiana today forced workers to evacuate, causing a key distillation unit to shut and boosting prices of oil products.

    The fire, which reportedly started in the 45K bbl/day heavy oil hydrocracker unit, is still burning but is now under control; it is not yet known what caused the fire or how long it would take to repair any damage, which could take months to fix if the fire damaged the reactors. read more

    Shell’s “ballooning” debt could put 7.5% dividend at risk, analyst says

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    Aug 10 2016, 14:57 ET | By: Carl Surran, SA News Editor

    Royal Dutch Shell’s (RDS.A, RDS.B) 7.5% dividend could be at risk because of its “ballooning” debt, says Raymond James analyst Jean-Pierre Dmirdjian, adding that the concerns outweigh the longer-term appeal of the company’s transformation story.

    The analyst says his fair value of ~$27/share makes Shell seem like a potential buy, but it is “too soon to be charmed by the reshaping plan” announced in June.

    James notes the “unsupportive oil price environment [which] puts a strain on cash flow” and makes debt reduction an increasing priority; the firm reiterates its Market Perform rating on the stock. read more

    Dividend At Risk – Royal Dutch Shell

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    Summary

    Shell produced a meager $3B of operating Cashflow for H1 2016.

    Cash Commitments for Capex, Debt and Dividends were about $20B.

    Shell does not stack up until an oil recovery to $80 IMO.

    Introduction

    Royal Dutch Shell (NYSE:RDS.A) (NYSE:RDS.B) released results this morning in Europe. Both the London and Amsterdam listings are down 4%. RDS is yielding about 7% this morning at current prices in Amsterdam.

    Let’s get the disclosure bit over with. I was long Shell up until a few months ago. I sold as its share price recovered from the January meltdown. Having analyzed the company several times on SA, I concluded I was not comfortable holding the stock. Of course, if I had continued to hold and sold now, I would have made a much better return at today’s prices. read more

    Royal Dutch Shell: Huge Dividend And Long-Term Growth Ahead

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    Wayne Duggan: 20 July 2016

    A number of British stocks have been hit hard since the referendum vote to leave the EU, but Royal Dutch Shell (RDS.A, RDS.B) is not one of them. Shares are now up 0.3% since the Brexit vote after initially falling more than 8% during the knee-jerk market sell-off.

    With the possibility that the Brexit could severely impact British GDP growth in coming years, RDS.B offers a unique opportunity to invest in a company within a sector that is in a global upswing, a company that has significant international exposure and a company that is committed to maintaining the single largest dividend payment in the MSCI World Index. read more

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