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Daily Telegraph: Royal Dutch Shell

Brokers' say
(Filed: 08/02/2006)
Brokers' updates are compiled by Hargreaves Lansdown. The stockbrokers' views summarised here are their own and not necessarily those of money.telegraph or Hargreaves Lansdown
Royal Dutch Shell
Sell at 1913p (this week's price 1933p) advises SG Cross Asset Research.
Following the group's recent full year results, SG believes the market is underestimating the many challenges still facing the group:
1) Cost overruns at the Siberian Sakhalin project.
2) a 25 per cent increase in capital expenditure plans for 2006 over 2005.
3) A lack of direction on the use of cash flow generated over 2006 (just $5 billion now to be returned to shareholders against SG's estimate of $10 billion).

SG believes that the shares currently price in capital expenditure plans that are insufficient to implement the company's growth strategy.
SG concludes that a weak rate of oil & gas production growth up to 2008 does not appear to have been fully discounted in the share price.

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