THE WALL STREET JOURNAL
By ANDREW PEAPLE
Bump in the road, or grinding halt? Royal Dutch Shell is confident its $4.1 billion fourth-quarter earnings will prove the former despite falling 13% below expectations, which it blamed on poor performance in its refining business. That obscured an encouraging improvement in the oil major’s return on capital. But investors hoping this will soon translate into higher dividends may now have to wait a bit longer.
Shell’s return on capital improved to 11.5% in 2010 from 8.5% the year before, boosted by a 5% rise in oil and gas production and cost cuts on target at $2 billion. Key gas projects in Qatar should help keep production stable and cash flow heading upwards this year, despite delays to its drilling plans in Alaska and the Gulf of Mexico.
That general trend should soothe concerns about the poor refining result, which Shell put down to maintenance costs, narrowing margins and exchange-rate movements. Still, the refining slippage has likely delayed Shell from returning more cash to investors. Shell forecasts operating cash flow of $36 billion to $43 billion by 2012, on a forecast oil price range of $60 to $80 per barrel, well above net capital expenditure expected at $25 billion to $30 billion annually out to 2014. That implies plenty of scope to grow the dividend.
Caution is the watchword for now, however. Operating cash flow of $27.4 billion in 2010 was still 24% short of Shell’s 2012 target. Shell has already announced the dividend will be flat for the first quarter of 2011: It will likely wait until later in the year, when sales progress from its Qatar LNG projects and the path of oil prices is clearer, before considering any increase, which may now have to wait until 2012.
With production output also likely to be flat on-year, 2011 is shaping up as a solid-but-unspectacular year for Shell. The small premium the stock trades at compared with its European peers11.1 times forecast 2011 earningsmay not widen much further.
Write to Andrew Peaple at [email protected]
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.
