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Shell Shares Slide After Third Quarter Profit Warning

By Scott Kanowsky: Thu, Oct 6, 2022

Investing.com — London-listed shares in Shell PLC (LON:SHEL) fell in mid-morning trading after the energy giant warned that lower refining margins will hit third-quarter earnings.

In a trading update on Thursday, Europe’s largest oil firm said its indicative refining margin is now expected to come in at $15 per barrel during the period, down from $28 per barrel in the second quarter.

“[T]he decrease in margin is expected to have a negative impact of between $1.0B and $1.4B on the third quarter Adjusted [earnings before interest, tax, depreciation and amortization] for Products compared to the second quarter 2022,” it said.

The group’s indicative chemicals margin is also seen dipping to -$27 a ton versus $86 a ton in the prior three-month timeframe. The downturn will negatively impact quarterly core earnings at Shell’s chemical unit by between $300M and $600M, the company said. read more

Extracts from an article by Garry White: 22 Aug 2015

Some in the City are concerned that distributions to shareholders at some major dividend payers are too high. This is particularly true for the oil sector.

• Opec is being eaten alive and needs to meet to heal its wounds

• Low oil prices bite as Premier Oil waits to tap Shetland field

Based on current forecasts, the prospective yield in 2016 for BP is about 6.9pc and for Shell it stands at 6.7pc. These unusually high yields are often an indicator of an impending cut in the payout. read more

By LAURA CHESTERS FOR DAILY MAIL

The oil price rout found new victims on both sides of the Atlantic yesterday as BG Group and Chevron revealed profits had tanked.

BG, which is in the process of being sold to Royal Dutch Shell, reported a 65 per cent fall in second quarter profit to £275.5million, while Chevron’s fell 90 per cent.

The oil price has crashed by around 50 per cent since last summer as the shale oil boom in the US, which turned it into the world’s largest fuel exporter, pushed global production higher. read more

From a Bloomberg article by Joe Carroll and Tara Patel published 12 Jan 2015 by Business Report under the headline:

“Analysis: Falling oil prices to trigger flood of write-downs”

Extracts

TUMBLING crude prices will trigger a flood of oilfield write-downs starting this month after industry returns slumped to a 16-year low, calling into question half a decade of exploration.

With crude prices down more than 50 percent from their 2014 peak, fields as far-flung as Kazakhstan and Australia are no longer worth pumping, says a team of Citigroup analysts led by Alastair Syme. Firms on the hook for risky, high-cost projects that do not make sense in a $50-a-barrel (R587) market include international titans such as Royal Dutch Shell and small wildcatters like Sanchez Energy. read more

OPEC’s decision on Thursday not to cut production in order to prop up oil prices sent markets reeling. Oil company shares slumped, wiping billions off firms’ market value… As they come to terms with the new oil regime, companies will cut spending by up to 10 percent in 2015… and delay new project approvals.

LONDON, Nov 28 (Reuters) – With oil company revenues set to drop on the back of a rout in prices, boards will have to cut investments and increase borrowing to maintain their cherished dividend payouts.

OPEC’s decision on Thursday not to cut production in order to prop up oil prices sent markets reeling. Oil company shares slumped, wiping billions off firms’ market value and leaving dividend payouts as the only solace for shareholders.

The world’s top oil companies, or majors, including BP , Royal Dutch Shell, Total, ExxonMobil and Chevron are already in the midst of a painful belt-tightening process. read more

“Royal Dutch Shell is another company with a doomed oil sands project, according to the Carbon Tracker Initiative. Its Carmon Creek project needs oil prices to hit $157 per barrel in order to be profitable. On top of that, Royal Dutch Shell is seeking to drill for oil in the Arctic, which has already wasted $5 billion of investors’ capital and would waste more money if drilling restarted.”

By John Donovan

According to an article by Matt DiLallo published by The Motley Fool on 23 August, former US VP Al Gore believes that the balance sheets of ExxonMobil, Royal Dutch Shell Plc, ConocoPhillips, Total SA and BP plc include $7 trillion of worthless ‘unburnable” carbon assets. 

Extract

“This unburnable carbon is the oil, gas, and coal that is still in the earth that, if extracted and burned, would push the globe over the edge in terms of climate change. Because this is an edge we can’t cross, it would suggest that the companies owning the assets are all but doomed.” read more

Extracts from a Daily Mail/This is MONEY” article by Rob Davies published 31 July 2014 under the headline: “Energy lift boosts shares in Royal Dutch Shell and BG Group after both post strong second quarter results”

Boss Ben van Beurden has vowed to sell underperforming assets and be more selective about spending, after beginning his tenure in January with the firm’s first profit warning in a decade. Van Beurden said Shell was ‘less exposed than some of our rivals’ to the impact of sanctions on Russia after the downing of Malaysian Airlines flight MH17 over Ukraine. But he focused on the emotional impact on Shell, which lost four staff and eight members of their families. ‘As a Dutchman, of course, I grieve for the many compatriots who lost their lives in this crash,’ he said. ‘Then, as CEO of Shell, I grieve together with the other 92,000 Shell staff for the colleagues we lost, together with so many of their family members.’ read more

By John Donovan

In view of the recent shattering news from the jinxed Kashagan project…

Production at Kazakhstan’s Kashagan Oil Field Halted Until 2016

…it is interesting to reflect back on the situation as it was in 2007, reported in this Reuters article by Tom Bergin.

It seems that not much has changed.

It also explains why Royal Dutch Shell ended up issuing a profits warning and launching a fire sale of assets, following a succession of disastrous projects mired by incompetence.  read more

Extract from a CBS money watch article published 7 July 2014

Wal-Mart Stores (WMT), the world’s largest retailer, topped the latest Fortune 500 global rankings of the most valuable companies by revenue, edging out Royal Dutch Shell (RDS.A), the Anglo-Dutch oil and natural gas company, which finished in second place. This marks a comeback for Wal-Mart, which trailed first-place finisher Shell last year. A 40 percent drop-off in profit and a 4.6 percent decline in sales in 2013 hurt the energy giant. read more

Extracts from a Motley Fool article by Arjun Sreekumar published 23 June 2014

On Monday, Shell announced the sale of a 19% stake in Woodside Petroleum, a deal that is expected to raise $5 billion. On Wednesday, the company announced that it had filed a registration statement with the U.S. Securities and Exchange Commission related to the proposed IPO of its pipeline subsidiary, which could raise up to $750 million. Due largely to ill-timed investments in U.S. shale, continued security issues at its Nigerian operations, and its beleaguered drilling program in Alaska’s Chukchi Sea, Shell’s return on capital employed, or ROCE, averaged under 15% from 2008 to 2012. Sales of under performing downstream and upstream North American assets are providing much-needed cash and should help the company gradually improve its return on capital. Overall, the combination of asset sales, reduced spending, and higher cash flow should allow Shell to grow its dividend at a stronger pace over the next few years, assuming commodity prices remain high and assuming that the oil giant can bring new projects online on time and on budget. read more

Extract from an Industrial Info Resources article by John Egan published 23 June 2014

Royal Dutch Shell plc is selling its acreage in the Eagle Ford Shale to Sanchez Energy Corporation for about $639 million, continuing the super-major’s asset sales and portfolio repositioning. Shell bought that acreage a few years back for an estimated $1 billion. Last summer, the super-major took a $2.1 billion write-down on the value of its Eagle Ford assets.

FULL ARTICLE

“During Ollila’s time at the helm, Shell has spent hundreds of billions on new projects and lavished generous pay deals on its executives, leading to several protest votes by big investors.”

By John Donovan

The Sunday Times reported on the front page of its business section on 8 June 2014 the news that Shell has started a search for a new chairman to replace the tainted Finn, Jorma Ollila. 

Extract

“During Ollila’s time at the helm, Shell has spent hundreds of billions on new projects and lavished generous pay deals on its executives, leading to several protest votes by big investors.”

Mr Ollila was recently fined by market regulators for failing to disclose his ownership and control of a company in Luxembourg worth 8.2 million euros. He has admitted breaking the law. He prefers to call it “neglecting the law.” read more

By John Donovan

When the surprise announcement was made by Peter Voser that he would be stepping down early from his position as Chief Executive of Royal Dutch Shell Plc, it was claimed that his early exit was prompted by a sudden desire to spend more time with his family.

It supposedly had nothing to do with the financial meltdown that happened on his watch and resulted in a profits warning being issued as soon as he had been pushed out the door. 

Voser was responsible for a number of bungled mega projects, including Arctic oil exploration. read more

Extracts from a Reuters article published 20 May 2014

LONDON (Reuters) – Royal Dutch Shell will hold on to its refining business despite shedding many underperforming downstream assets, its chief executive said on Tuesday. The global refining sector has suffered over the past year from weak profit margins due to rising capacity and increasing competition and Shell’s downstream business has been a drag on its 2013 and first quarter 2014 results.

FULL ARTICLE

Extract from a Motley Fool article by Bob Ciura published 19 May 2014 under the headline: How Liquefied Natural Gas Could Come to the Rescue for Royal Dutch Shell and BP

Royal Dutch Shell’s core net profits fell by 23% last year, prompting the company to undergo what management delicately termed “hard choices” in its portfolio. Basically, the company is resorting to cutting capital expenditures in light of disappointing upstream projects and sharply narrower refining margins. To that end, Shell plans to reduce capital expenditures by $9 billion in 2014 from $46 billion in 2013 to an estimated $37 billion this year. That represents a severe 20% drop. This is a concern since Shell’s production is already going in the wrong direction. Oil majors across the board are suspending new projects or cancelling them altogether, which could put them in dire straits later on. Fortunately, LNG represents one major area that both Shell and BP continue to invest in, and the potential is clearly compelling. read more

Reuters article by Dmitry Zhdannikov published 30 April 2014

(Reuters) – Royal Dutch Shell capped a strong first quarter reporting season for oil majors with better-than-expected results which were boosted by gas earnings, while shareholders were rewarded with a higher dividend. Shell, which disappointed the market earlier this year with a rare profit warning, said the bulk of its writedown in downstream on Wednesday was related to the Bukom oil refinery in Singapore. The firm said its first quarter upstream earnings were supported by stronger gas results, offset by the impact of exploration well write-offs, and higher costs and depreciation. “Less positively, oversupply in the industry, rising costs on the back of increasingly difficult explorations, Shell’s exposure to Russia and generally lower margins all present challenges…” read more

Extract from a Sunday Express article by: Helen Massy-Beresford published Sunday, April 27, 2014

Royal Dutch Shell is expected to report that its profits have slumped 38 per cent year on year to $4.6 billion (£2.7 billion), when it unveils its first-quarter results on Wednesday. As part of his turnaround plans van Beurden has pledged to improve cash flow and cut costs.

FULL ARTICLE

To the best of my knowledge, both Shell projects are fraught with danger, are pushing the bounds of technology, have attracted risk warnings from experts and are self-insured by Shell because no commercial contingency insurance specialists are willing to provide cover. 

By John Donovan

An article published today by Reuters gives some idea of the financial calamity that could engulf Shell in the event of  a Prelude FLNG or Shell Arctic drilling disaster, with potential for even more dire consequences. 

Extract from Reuters article published 18 April 2014 under the headline: “Compensation battle rages four years after BP’s U.S. oil spill“

The oil company has spent over $26 billion on cleaning up, fines and compensation for the disaster, which killed 11 people on the rig and spilled millions of barrels of oil into the Gulf of Mexico for 87 days after the blast on April 20, 2010.  That is more than a third of BP’s total revenues for 2013, and the company has allowed for the bill to almost double… read more

Ben van Beurden, Chief Executive Officer. Royal Dutch Shell Plc

Extracts from an article by Jeff Nevile published Friday 11 April 2014 by oilvoice.com

Royal Dutch Shell Plc was one of the first to announce a plunge in profit this year as they announce a 48% drop. As Shell postponed their offshore drilling in Alaska, Chief Executive Officer Ben Van Beurden promised to slash capital spending to increase their return and cash flow performance. The question is, what is the duration of this spending cut going to be and how much damage is it causing the big players? read more

Article published on 2 April 2014 by Seeking Alpha

Royal Dutch Shell’s (RDS.A, RDS.B) plan to sell much of its onshore Nigerian production has been met with skepticism – with oil stealing rife in the Niger delta, who would buy? – but FT reports Shell has received more than 100 serious bids for its 30% stake in five blocks valued at $3B-$5B. A clean exit from the delta woes would be an early win for new CEO Ben van Beurden, whose ascent was aided by the massive oil theft that contributed to January’s profit warning. read more

Peter Rees QC

“Rees’ departure from Shell prompted much speculation in the City, given the company’s recent profit warnings, the on-going European Commission investigation into oil price-rigging and the arrival of new CEO Ben van Beurden.”Mr Rees has refused to comment on the circumstances of his unexpected and unexplained departure from Royal Dutch Shell during a financial crisis. 

By John Donovan

Peter Rees, until January Legal Director of Royal Dutch Shell Plc and an executive director of the company, has resurfaced at London Chambers “Thirty Nine Essex Street” as a counsel and commercial arbitrator. A considerable fall in prestige. He led a 1,000 strong legal department at Shell.

The reason for his sudden department from Shell days before the company issued a profits warning that shook the markets was said to be known by only three people other than Rees- Peter Voser, the retiring CEO, Ben van Beurden, the incoming CEO, and HR boss, Hugh Mitchell. read more

Extract from an article by Eric Yep published 25 March 2014 by The Wall Street Journal

SEOUL— Royal Dutch Shell PLC’s global gas division will focus on large ventures where it has more control while it is likely to continue trimming some holdings and unprofitable investments as part of a program of cost-cutting and asset sales, a senior gas executive with the company said. “We typically like projects that we have a bigger position in that we can influence more,” Maarten Wetselaar, executive vice president, Integrated Gas, said in an interview… The London-listed oil major issued its first profit warning in a decade in January… read more

Ben van Beurden, Chief Executive Officer. Royal Dutch Shell Plc

Extracts from an article by EDUARD GISMATULLIN published by Bloomberg News on 14 March 2014 under the headline: Shell in slashing mode: Cuts Americas spending by 20% after losses in shales

THE HAGUE (Bloomberg) — Royal Dutch Shell plans to lower spending in the Americas by a fifth as Europe’s largest oil producer focuses on more profitable operations. It’s “not acceptable” that Shell, now deploying about 36% or $80 billion of its capital in North America, has been losing money, Chief Executive Officer Ben van Beurden said. Van Beurden has pledged to shrink spending costs this year and speed up asset sales including refineries after The Hague-based company issued its first profit warning in a decade. read more

Extracts from a Reuters article by Karolin Schaps and Dmitry Zhdannikov published 13 March 2014

LONDON, March 13 (Reuters) – Royal Dutch Shell will cut spending by a fifth and lay off staff at its American exploration and production business, the company said on Thursday, in another sign that oil majors are struggling to profit from the booming U.S. shale sector. The spending cuts announced on Thursday follow Shell’s decision in January to suspend its controversial Arctic drilling programme and pledge to cut capital expenditure and streamline operations worldwide after the company’s least profitable fourth quarter in five years. “I don’t think it is a matter of trying to reinvent the company in a fundamentally different way; it is a matter of tackling some of the issues that we know need tackling,” van Beurden told journalists on a conference call after Thursday’s strategy update. read more

Ben van Beurden, CEO Royal Dutch Shell Plc

Extracts from an article by Eduard Gismatullin published on 13 March 2014 by Bloomberg News

Royal Dutch Shell Plc (RDSA) plans to lower spending in the Americas by a fifth as Europe’s largest oil producer focuses on more profitable operations. It’s “not acceptable” that Shell, now deploying about 36 percent or $80 billion of its capital in North America, has been losing money, Chief Executive Officer Ben van Beurden said.

Van Beurden has pledged to shrink spending costs this year and speed up asset sales including refineries after The Hague-based company issued its first profit warning in a decade. He also scrapped targets for cash flow, delayed drilling off Alaska and promised to restructure shale operations in North America. read more

Extracts from an article by ANDREW PEAPLE published 13 March 2014 by The Wall Street Journal

Shell’s basic message to investors appears to be that the oil major will spend more on assets it think it will prove profitable, while getting out of assets it doesn’t think will do so well. To rekindle investor interest, Shell’s new chief executive Ben van Beurden will have to provide more than platitudes. Turning round the company will take more than even the most finely-chosen words. read more

Extracts from an article by Mark Stones publish 13 March 2014 by The Motley Fool

Shell’s struggles have been well documented and a profit warning was announced in January. The shares have lagged the wider market over the last 12 months, falling 1.5%. In response Shell is cutting upstream spending in America by 20%, with the firm re-evaluating its shale operations… To bolster its capital strength the oil producer has embarked on a programme of asset sales…

FULL ARTICLE

Ben van Beurden, CEO, Royal Dutch Shell Plc

Extracts from an article by Martin Flanagan published on 13 March 2014 by The Scotsman under the headline: “Shell says some North Sea assets may be for sale”

OIL giant Shell suggested today that some of its “mature” North Sea energy assets may be for sale after a string of production breakdowns last year and as it seeks to rein in its growth plans under its new chief executive. Ben van Beurden, who took the helm 10 weeks ago, said in a presentation to financial markets: “We have to be honest with ourselves. The North Sea has disappointed for Shell in 2013. We are looking carefully at cases of unplanned downtime (of rigs).” read more

Extracts from a Reuters articled published Thursday 13 March 2014

(Reuters) – The pay of Royal Dutch Shell’s former chief executive, Peter Voser, halved to $11.24 million last year following what the company described as a disappointing performance. Shell suspended its controversial Arctic drilling programme earlier this year and pledged to cut spending and streamline operations following disappointing earnings in the fourth quarter of 2013 that were the least profitable for five years. “The business performance in 2013 was disappointing. This is reflected in the reward outcomes for the year,” Shell’s head of remuneration committee Hans Wijers said on Thursday. The company said it had also trimmed the base salary of new chief executive, Ben van Beurden, to reflect shareholder sentiment. He will receive a base salary of 1.4 million euros ($1.95 million) compared with Voser’s 1.64 million euros. read more

Article by Terry Macalister published by TheGuardian.com Thursday 13 March 2014

Annual report reveals how Peter Voser made enormous gains through share awards and other performance-related bonuses

Former chief executive Peter Voser left Shell at the turn of the year. Photograph: Guido Benschop/AFP/Getty Images

Shell paid former chief executive Peter Voser £22m over two years even though there was a profit warning soon after he left and his successor says the business has failed to perform as strongly as it should have done.

The 2013 annual report published on Thursday shows that Voser, who left at the turn of the year, received total remuneration of just over £7m last year and almost £15m in 2012. read more

Article published by BBC News 13 March 2014

Royal Dutch Shell had a “challenging year” in 2013 in part due to a deteriorating security situation in Nigeria, the company said.

Profits from refining operations were hit in Asia and Europe by an oversupply of global capacity and lower demand, the company said.

Annual profits at Royal Dutch Shell fell to $16.75bn (£10.05bn), from $27bn in 2012.

Nevertheless, the company said it has “laid firm foundations for the future”.

Several areas of Royal Dutch Shell’s business had operated below their full potential in 2013, chief executive Ben van Beurden said. read more

However, unbeknown to Van de Vijver, Michiel Brandjes (right), who was alarmed by the findings of the report, sent a copy to a New York law firm Cravath, Swaine & Moore. This meant that events were no longer in the control of Shell. Instead, Shell’s most sensitive issue since its close association with Adolf Hitler and the Nazis several decades ago, had been disclosed to an outside firm, that had to consider and protect its own reputation.

By John Donovan

In May 2003, Frank Coopman, the then Chief Financial Officer of Shell EP, delivered bad news about Shell’s operations in Nigeria to the Chief Executive of Shell EP, Walter van de Vijver.

Van de Vijver sent Coopman back to Nigeria to investigate further.

The subsequent findings, set out in a status report, were even more devastating, revealing an overstatement of 1.1 billion boe.

Van de Vijver had instructed a team led by Coopman to work on the reserves issues.

The team included a top Shell lawyer, Michiel Brandjes, the then Company Secretary of Royal Dutch Petroleum. read more

Extract from an article by Sarah Young published on Mon 3 March 2014 by Reuters

(Reuters) – London-listed oil company Royal Dutch Shell (RDSa.L) said board-member Josef Ackermann would retire as a non-executive director at its annual meeting in May.  Shell’s annual meeting is scheduled for May 20. The company is holding a management day on March 13, when it will attempt to win round investors after a major profit warning in January.

FULL ARTICLE

Royal Dutch Shell plans to put three oil and gas assets in the North Sea up for sale as it seeks to ramp up disposals and focus on improving shareholder returns after a shock profit warning.
read more

Royal Dutch Shell’s decision to unload a massive amount of assets is a troubling sign. Shell’s fire sale casts into doubt how effective it can be in producing growth this year, even with its promising projects. Shell recently suspended drilling in the Arctic. It’s also selling a stake in a liquefied natural gas project in Australia for $1.1 billion and may also consider unloading an interest in a U.S. pipeline project. These actions are part of a broader initiative in which Shell intends to sell $15 billion worth of assets over the next two years. read more

By Brett Foley, Andy Hoffman and Jesse Riseborough: February 12, 2014

Macquarie Group Ltd. (MQG) and Glencore Xstrata Plc (GLEN) dropped out of bidding for Royal Dutch Shell Plc (RDSA)’s Australian oil refinery and filling stations, according to four people with knowledge of the matter. The assets Shell is selling include storage terminals, filling stations and an oil refinery in Geelong, south of Melbourne. Shell is stepping up asset sales after new Chief Executive Officer Ben van Beurden promised last month to cut capital spending following the company’s first profit warning in a decade. read more

Jeff Lewis | February 12, 2014 5:18 PM ET

CALGARY – Royal Dutch Shell PLC told regulators it is halting work on its Pierre River mine in northern Alberta’s oil sands and that it has no idea when it may revive the blueprints. The Hague-based company this year cancelled plans to drill in Alaska’s Arctic and postponed development of a liquefied natural gas venture offshore Australia. The company issued a rare profit warning last month before reporting a 49% plunge in quarterly earnings to $2.9-billion. read more

OSSL and their allegations of Police corruption by Shell in relation to the Corrib Gas Project seems to have become entangled is an extraordinary situation involving the Irish Police Force (The Garda) and the authority responsible for independently investigating such allegations, the Garda Siochána Ombudsman Commission. In November Garda Commissioner Martin Callinan issued an astonishing warning of ‘mass assassinations’ if the Ombudsman gain access to certain classified files. The latest bombshell development is news that the Police Ombudsman hired a British security company to investigate if it had been placed under electronic surveillance (by the police?)

by John Donovan

OSSL and their allegations of Police corruption by Shell in relation to the Corrib Gas Project seems to have become entangled is an extraordinary situation involving the Irish Police Force (The Garda) and the authority responsible for independently investigating such allegations, the Garda Siochána Ombudsman Commission.

In November Garda Commissioner Martin Callinan issued an astonishing warning of ‘mass assassinations‘ if the Ombudsman gain access to certain classified files. read more

I can exclusively reveal today that the question of whether Shell was legally obliged to issue a profits warning did not first arise in relation to the final quarter. It was raised at the highest levels of Shell and of the Financial Conduct Authority some months earlier, in between the announcement of Peter Voser’s early retirement and the announcement of the Q3 results.

By John Donovan

Shell shareholders have been faced with a series of shocks, one stunning announcement by Royal Dutch Shell Plc after another.

All rather mysterious and without any credible explanation.

Started with the announcement of Voser’s decision to take early retirement from Shell at the age of 55, as a lifestyle change. It was said at the time to have “stunned investors.”

Next came the surprise announce of Ben van Beurden as his replacement. No one guessed that he was even in the race for the top job at Shell. read more

Oil prices in the United States hover near $100 per barrel and overall domestic production of oil and natural gas is soaring. With all this in mind, you’d assume the environment would be ripe for Big Oil to produce gushing profits.

Royal Dutch Shell completely whiffed in the U.S. and North America. Its Americas segment posted a $1.4 billion net loss in the fourth quarter and a $3.7 billion net loss for all of 2013.

FULL ARTICLE

Shell’s investment in its Arctic Alaska offshore exploration is approaching $6 billion after eight years. For all that, the company has two test wells partly drilled in 2012, one in the Chukchi Sea and one in the Beaufort Sea. The decision not to proceed with 2014 drilling was a tough one for Shell, the company’s Alaska president, Pete Slaiby, said in a Jan. 30 interview. Shell doesn’t expect the cancellation will have any immediate effort on the company’s workforce in Anchorage. However, had the exploration gone ahead this summer it would have employed about 2,000 people in total… read more

…both BP’s and ConocoPhillips’ asset sales look downright modest in comparison to the outright fire sale Royal Dutch Shell will soon embark on. Royal Dutch Shell unloaded billions last year, with even greater amounts to be sold off over the next two years. That’s why investors may have legitimate cause for concern about the fate of Shell’s future growth trajectory.

by Bob Ciura

Royal Dutch Shell plans to sell off several billion dollars worth of assets over the next two years. Should investors be worried?

The last year was a tough one for integrated oil majors. Thinning refining margins put a serious dent in downstream earnings, and upstream profitability failed to impress despite cooperative energy prices. As a result, it’s not entirely surprising to see members of Big Oil such as (NYSE: BP) sell off non-critical assets.

Even independent exploration and production major ConocoPhillips (NYSE: COP), which isn’t nearly as integrated as its peers after spinning off its downstream and midstream business, got in on the asset sale game last year. read more

Sometimes you just have to say goodbye to a stock, even when it has been good to you over the years. RDS.A was willing to go the extra mile into some pretty ambitious energy sources. From Australian natural gas to drilling in the Arctic Circle, Shell could be seen as the “growth” orientated major. Unfortunately, those go-getting plans haven’t gone according to plan, and now RDS.A is the process of closing up shop in several of these locations and selling the assets. And with many years of underperformance behind it, it may just be time to sell Royal Dutch Shell stock out of your portfolio. read more

A total of $15 billion worth of assets are expected to be sold this year and next, including petrol stations in Australia, offshore production capacity shares in Brazil, pipelines and a host of other assets (link). Problem is that many of the projects were meant to boost production both upstream and downstream, which means that most likely Shell will not be able to stem a steady long-term production decline.

Zoltan Ban: February 5, 2014

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Royal Dutch Shell (RDS.A) (RDS.B):

While in 2012 total production of oil and gas increased by about 47,000 barrels of oil equivalent, it seems that Shell production declined for 2013 by 1.8% compared to 2012 and fourth quarter decline was 4.7%, compared to the fourth quarter of 2012. This decline will probably continue into 2014 and perhaps beyond as Shell actually tries to divest from many projects which were hoped to bring more production online (link). read more

In May 2013, when Voser’s retirement was announced, he was described by Reuters as having been Shell’s “renaissance CEO”. Fast-forward eight months and Voser’s successor stunned the market with a profits warning. It was a remarkably quick fall from grace for both the former chief and the company… …the company’s misstatement of its proven reserves early in the century landed it with a multi-million dollar fine from stock market regulators and forced the departure of its chairman as well as shocking investors. Shell has had its own environmental problems in Nigeria. Now it is being severely criticised for overspending.

By John Kemp

Feb 4 (Reuters) – “All political lives, unless they are cut off in midstream at a happy juncture, end in failure,” wrote Enoch Powell, a former member of Britain’s parliament who held controversial views on immigration and national identity.

Much the same could be said of business careers, as Shell’s former chief executive Peter Voser has learned the hard way. His strategy of continuing to invest in complex megaprojects through the oil industry cycle is now blamed for the company’s recent profit warning and underperformance. read more

In the wake of this month’s profits warning from Royal Dutch Shell and its problems in Nigeria, its upstream and downstream problems and the failure of its massive capital expenditure program to yield any meaningful benefits in the short term, investors appear to be asking themselves whether a move back to BP might be in order. Shell’s new CEO Ben van Beurden in his new role as CEO appears to be clearing the decks for some form of company reorganisation as the company struggles with falling revenues and lower oil prices. read more

LONDON EVENING STANDARD TODAY:

Chris Finlayson’s dreadful first year as chief executive at BG Group was today capped by the news that profits slumped 37% to $4.16 billion (£2.54 billion) in 2013. The former Royal Dutch Shell executive said he shared shareholders’ “disappointment” at the oil producer’s many problems, which have included four profit warnings in little more than 12 months. Garry White, chief investment commentator at broker Charles Stanley, said: “I reckon it’s time for BG Group to be broken up.”

By John Donovan

WE REPEATEDLY WARNED BG SHAREHOLDERS AND EMPLOYEES ABOUT CHRIS FINLAYSON…

HE IS NOT THE ONLY COMMON DENOMINATOR BETWEEN ROYAL DUTCH SHELL AND BG GROUP.

BOTH COMPANIES HAVE JUST ISSUED PROFIT WARNINGS

• How Chris Finlayson bungled the Mother of all Projects: Sakhalin II: 24 December 2012
• BG Group corporate incubator for Shell strays?: 22 December 2012
• BG Group CEO Chris Finlayson and the Shell ‘Touch F*** All’ Scandal: 20 December 2012
• CHRIS FINLAYSON AND THE ROYAL DUTCH SHELL RESERVES SCANDAL: 18 December 2012
• Contact with BG Group about its controversial new CEO Chris Finlayson: 17 December 2012
• Shareholder alarm over appointment of BG Group CEO Chris Finlayson: 16 December 2012
• Chris Finlayson: One can of worms after another: 17 Jan 2013
• Chris Finlayson saw himself as the victim of a brutal Shell regime: 21 October 2013

THE DEVASTATING ARTICLE PUBLISHED TODAY BY THE LONDON EVENING STANDARD IS SELF-EXPLANATORY

Gloom continues for new BG boss amid profits slide

4 February 2014

Chris Finlayson’s dreadful first year as chief executive at BG Group was today capped by the news that profits slumped 37% to $4.16 billion (£2.54 billion) in 2013.

The former Royal Dutch Shell executive said he shared shareholders’ “disappointment” at the oil producer’s many problems, which have included four profit warnings in little more than 12 months. read more

By Brian Swint February 04, 2014

BP follows Royal Dutch Shell Plc (RDSA) and Exxon Mobil Corp., the two biggest oil companies by market value, in reporting lower earnings as the cost of drilling rises, refining profits slump and oil prices stagnate.

Shell and BG Group Plc (BG/) both issued profit warnings for the fourth quarter. BG today reported the first loss since 2000 on output disruptions from Egypt and higher exploration costs. Shell said last week it will accelerate asset sales to offset investment after capital spending reached a record in 2013. read more

by Alice Young, Feb 3 2014, 15:58 GMT

BP’s results follow that of European peer Shell, which last week posted a drop in its fourth-quarter and full-year earnings matching a shock profit warning issued earlier in January.

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Royal Dutch Shell just announced that it had a terrible 2013, but management wants to assure you that this year will be better. Shell announced that it was backing away from its absurd plans to return to Alaska’s Chukchi Sea to revive its Arctic drilling activities. That’s good, because watching Shell try to get back to the Chukchi was like watching a train wreck in slow motion. It was a comedy of errors, and cutting its losses was the only possible call for Shell to make.

by Sara Murphy, The Motley Fool Feb 2nd 2014 8:00AM

Royal Dutch Shell just announced that it had a terrible 2013, but management wants to assure you that this year will be better.

Shell announced that it was backing away from its absurd plans to return to Alaska’s Chukchi Sea to revive its Arctic drilling activities. That’s good, because watching Shell try to get back to the Chukchi was like watching a train wreck in slow motion. It was a comedy of errors, and cutting its losses was the only possible call for Shell to make.

Ben Van Beuren, Shell’s new CEO, said the company planned in 2014 to focus more on profitability, rather than on increasing oil and gas output. That’s welcome news, especially since Shell had a reserve replacement ratio of 131% in 2013, which means the company has a strong asset base to support it. Van Beuren said that Shell would work to enhance capital efficiency in 2014, with “hard choices on new projects, reduced growth investment, and more asset sales.” read more