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MarketWatch: Shell surpasses BP as Europe’s largest listed oil company

Aug 9, 2006

LONDON (MarketWatch) — Oil major Royal Dutch Shell PLC (RSDA) has now overtaken the U.K.’s BP PLC (BP) as Europe’s largest oil company by market capitalization, due to production setbacks at BP, analysts said Wednesday.

As of 1455 GMT, Shell’s share price was 1.35%, or 26p higher at 1,951 pence, valuing it at GBP126.775 billion. BP’s share price meanwhile has risen 0.5% or 3.5p to 617.5 pence, giving it a value of GBP121.575 billion.

Since the beginning of the year, Shell’s shares have outperformed BP’s shares by 4%, according to Dow Jones Newswires calculations.

A London-based analyst said he wasn’t surprised by Shell’s new ranking. “Shell looks cheap in terms of multiples and people are willing to accept that oil prices are going to stay high for a while.”

The analyst also added that BP’s shares had suffered lately due to the shutdown of the Prudhoe Bay oilfield in Alaska U.S., the delayed restart of its Texas City Refinery following the death of 15 workers, and continued problems with its Thunder Horse platform after Hurricane Katrina hit the Gulf of Mexico last year.

The analyst also added that BP’s recent spate of share buybacks and dividend payouts was “shrinking its equity,” and therefore contributing to the drop in BP’s value.

BP’s CEO Lord John Browne earlier this year said the company’s cash redistribution, which totaled $19 billion in dividends and share buybacks in 2005, is expected to be about $50 billion between 2006 and 2008, assuming the Brent oil price averages about $41 a barrel.

The Brent crude oil price spiked to an intraday high of $78.64 a barrel Monday after BP announced the Prudhoe Bay shutdown over the weekend. BP shut down the oilfield after discovering extensive corrosion along the pipeline, which connects the field to the Pacific Ocean. The shutdown has led to a 400,000 barrel-a-day loss in output, roughly 8% of the U.S.’s total production.

As of 1502 GMT, Brent Crude Oil was up 0.66%, or 0.51 cents at $77.87 a barrel. Brent Crude Oil prices have risen 26.2% or $16.17 since the beginning of the year.

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