APRIL 29, 2011
By ANDREW PEAPLE
Royal Dutch Shell‘s bump in the road has sure flattened out.
The oil company’s first-quarter earnings were up 53% on a disappointing last quarter of 2010, thanks to high oil prices and improved liquefied-natural-gas sales in Asia and Europe. Stronger cash flow may have some investors pressing for higher dividends. Shell should resist, for now.
Like BP, which reported on Wednesday, Shell has been shedding unwanted assets, leading to output shortfalls. Its production fell 3% year on year. But, also like BP, Shell’s results were boosted by higher downstream profits, which doubled year on year thanks to sharply wider refining margins.
But Shell is in much better shape than its British rival. It is selling assets by choice rather than necessity, to improve overall efficiency. Shell’s return on average capital employed improved in the first quarter to 12.9% against 11.5% in 2010. Shell expects production to be flat year on year in 2011 before rising 6% in 2012, with major projects such as its liquefied-natural-gas operations in Qatar coming on stream.
The better performance might appear to leave room for higher dividends. Operating cash flow of $8.6 billion in the first quarter amply covered $4.1 billion of capital spending and $1.6 billion of dividend payouts, while Shell’s debt-to-equity ratio fell to 14%.
Still, Shell should remain cautious until it is clear either that its output-raising plans are firmly on track or that elevated oil prices are here to stay. Based on its increased production outlook, the company is targeting $43 billion of cash flow in 2012 based on average oil prices at $80 a barrel. Right now, even with oil prices already averaging $87 a barrel in the last 12 months, Shell is short of that target: It generated $36 billion of cash flow over that period. There is room to return more to shareholders when investment needs allow. Shell paid out 29% of operating cash flow over the past four quarters compared with Exxon Mobil’s 42%.
Investors wanting to share more of Shell’s good fortune will have to be a bit more patient.
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.
