Financial Times: Lex COLUMN: Royal Dutch/Shell
Apr 30, 2004
Surprises from Royal Dutch/Shell are not normally prefaced with the word “welcome”. Fortunately for shareholders its reserves debacle has played out against a backdrop of high oil and gas prices. First-quarter earnings are strong, enabling the oil group to announce a $2bn share buyback and an increase in capital expenditure of up to $2bn. Investors can also draw comfort from the fact that excess cash flow has not been directed towards costly acquisitions to address the problem of Shell’s paltry reserve replacement ratio.
The buyback should provide welcome support for the share price. But the company would not elaborate on the oil price assumptions underlying the buyback. Dutch law no longer requires a share buyback to be of a minimum size, so uncertainty remains if oil prices should drop.
Much of the increase in capital expenditure is to address cost overruns in Russia and Nigeria. Only $200m is additional expenditure on pure exploration. The base level for exploration capital expenditure will also probably increase next year, and more than half is now directed at larger discoveries. But $500m in additional spending is a switch in investment to “short-term payback projects in high margin areas”. Shell may wish to bolster short-term returns, which will not be helped by the spending on cost overruns and exploration. The suspicion remains, however, that the former focus on development near established assets – which Shell admits was a mistake – has not been entirely eradicated.
On the day, the announcement has understandably led to share price gains. With investors keen to back a recovery Shell may regain further lost ground. But with no proposals on changes to governance likely until the end of the year, and no quick fix on the production profile, the discount to BP should remain significant.
This website and sisters royaldutchshellplc.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.
Royal Dutch Shell conspired directly with Hitler, financed the Nazi Party, was anti-Semitic and sold out its own Dutch Jewish employees to the Nazis. Shell had a close relationship with the Nazis during and after the reign of Sir Henri Deterding, an ardent Nazi, and the founder and decades long leader of the Royal Dutch Shell Group. His burial ceremony, which had all the trappings of a state funeral, was held at his private estate in Mecklenburg, Germany. The spectacle (photographs below) included a funeral procession led by a horse drawn funeral hearse with senior Nazis officials and senior Royal Dutch Shell directors in attendance, Nazi salutes at the graveside, swastika banners on display and wreaths and personal tributes from Adolf Hitler and Reichsmarschall, Hermann Goring. Deterding was an honored associate and supporter of Hitler and a personal friend of Goring.
Deterding was the guest of Hitler during a four day summit meeting at Berchtesgaden. Sir Henri and Hitler both had ambitions on Russian oil fields. Only an honored personal guest would be rewarded with a private four day meeting at Hitler’s mountain top retreat.
IN JULY 2007, MR BILL CAMPBELL (ABOVE, A RETIRED GROUP AUDITOR OF SHELL INTERNATIONAL SENT AN EMAIL TO EVERY UK MP AND MEMBER OF THE HOUSE OF LORDS: 
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A head-cut image of Alfred Donovan (now deceased) appears courtesy of The Wall Street Journal.
