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Posts from ‘January, 2008’

The Times: Bottom line not the only oil tale at Shell

February 1, 2008
Patrick Hosking: Business Commentary

Some people are never satisfied. Shell may have made greater annual profits last year than any other European company ever, but as one City sceptic remarked yesterday, one should expect nothing less from a company that has over the past decade enjoyed a ninefold increase in the selling price of its main product, crude oil.

However, big oil companies are facing nasty headwinds, not just from soaring exploration and production costs and thinner downstream margins, but also from the paucity of new finds. They are having to forage deeper into ever-costlier and politically suspect territories to rootle out ever-piddlier new pockets of the black stuff. The easy finds were all made long ago.

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The Times: Shell’s record $27bn profits invite calls for windfall tax

February 1, 2008
Robin Pagnamenta, Energy and Environment Editor

Royal Dutch Shell reported annual profits of $27.6 billion (£13.9 billion) yesterday, smashing European company records and prompting calls for a windfall tax on “obscene” oil profits.

But the record results, which were boosted by surging global crude prices, masked uncomfortable truths about the company’s lacklustre operational performance.

The Anglo-Dutch oil giant suffered a 6 per cent slump in daily oil production last year to 3.3 million barrels, down from 3.5 million in 2006. It also faced a 10 per cent rise in costs and a steep drop in both refining margins and cashflow.

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Forbes: Shell Cracking Under Cost Pressure

Lionel Laurent, 01.31.08, 8:50 AM ET

LONDON – Oil prices may be booming, but the strain of higher costs is beginning to show for Royal Dutch Shell.

The Anglo-Dutch oil and gas stalwart posted a 60.4% increase in fourth-quarter profits Thursday, to $8.5 billion, from $5.3 billion, but most of the gain came from the jump in crude prices this year. Excluding price fluctuations and a $963 million gain from asset sales, net profit for the quarter came in at a more modest $5.7 billion.

Royal Dutch Shell’s (other-otc: RDS.A – news – people ) ‘B’ shares fell 26 pence (52 cents), or 1.5%, to £17.18 ($34.22), on Thursday afternoon in London, while its ‘A’ shares fell 32 pence (64 cents), or 1.8%, to £17.57 ($35.00). Analysts had been hoping for profits of $5.8 billion, with Citigroup analyst James Neale noting that earnings from Shell’s oil products division missed forecasts by 33%.

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U.S.New & World Report: Shell Rakes in $8.5 Billion in Three Months

By Marianne Lavelle
Posted January 31, 2008

Royal Dutch Shell, the world’s second-largest publicly traded oil company, today reported net income up 60 percent last quarter to a record $8.47 billion, thanks to the same rising crude oil prices that most observers expect will lift the profits of Exxon Mobil and Chevron tomorrow to nearly historic levels.

Shell’s results were shy of the largest quarterly profit ever for a company in the United States—the record $10.7 billion that rival Exxon earned in the fourth quarter of 2005. But Shell’s full-year profit for 2007 of $31.3 billion set a record for a European company. Still, CEO Jeroen van der Veer’s muted comment was that the results were “satisfactory,” and the company’s stock reacted to the news with a downward slide. It wasn’t just that Shell’s results were in the lower range of expectations. Weighing on the company appeared to be the now apparent fact that Shell is producing less oil and that its performance cannot be sustained if a slowing economy lowers oil prices.

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Financial Times: Open season on oil companies

By Andrew Hill, Mure Dickie and Richard Milne
Published: January 31 2008 18:08 | Last updated: January 31 2008 18:08

“Obscene” profits and calls for “windfall taxes”: it’s oil company reporting season again. Royal Dutch Shell formally launched the 2007 full-year results festival in the UK on Thursday by recording the largest profit ever reported by a European company – $27.6bn after tax, adjusted for changes in the value of fuel stockpiles.

If the chorus of complaint from UK unions and environmental groups at the “£1.6m-per-hour” profit was predictable, so was the reaction of analysts: disappointment. Fourth-quarter net income was slightly below the market consensus. If the company reaped a bonus from the higher oil prices last year, it had to use it to offset lower production.

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Reuters: Shell flags lower oil reserve additions in 2007

Thu Jan 31, 2008 9:37am GMT
By Tom Bergin

LONDON (Reuters) – Royal Dutch Shell added “at least 1 billion barrels” of new oil and gas resources in 2007, Chief Executive Jeroen van der Veer said on Thursday, around half the level the oil giant flagged last year.

Van der Veer told reporters on a conference call that Shell made 11 material discoveries in 2007 and had an exploration success rate of 40 percent, yielding an extra 1 billion barrels of oil equivalent of resources.

A year ago Shell said it added “over 2 billion barrels oil equivalent of new conventional resources” in 2006.

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The Guardian: Shell posts record European profit but doubts linger

Reuters
Thursday January 31 2008
(Adds closing shares, share comparison)

By Tom Bergin

LONDON, Jan 31 (Reuters) – Royal Dutch Shell notched up the biggest ever profit of a European company of $27.6 billion in 2007, but lower production and indications of disappointing reserves suggest future earnings growth will rely on oil price rises.

The world’s second-largest non-government controlled oil company by market value said on Thursday its fourth-quarter current cost of supply (CCS) net income rose 11 percent to $6.7 billion. Excluding one-off items, the result was in the lower end of analysts’ range of forecasts.

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The Guardian: Security problems force Shell to scale back in Nigeria

Terry Macalister
Thursday January 31 2008

Shell has started to “streamline” its operations in the Delta region of Nigeria in what appears to be a final realisation that it is fighting a losing battle against militants in the region.

The company announced today it had taken a $716m (£359m) charge in its fourth quarter accounts to pay for the cost of restructuring the business in the light of security and funding problems there.

Nigeria has always been a controversial part of Shell’s business with much criticism from campaigners worried about both human rights and environmental problems in the area.

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allAfrica.com: Nigeria: Shell Job Cut Will Hurt Economy, Says Sylvia

This Day (Lagos)
31 January 2008
Chuks Okocha
Abuja

The Bayelsa State Governor, Timipre Sylva has appealed to the Federal Government to intervene in the planned job cut by the Shell Petroleum Development Company (SPDC) as it would have a spiral negative effect on the Nigerian economy.

Speaking with newsmen in Abuja, Timi Sylva also called on the Federal Government to pay its equity contribution to the oil companies, as it is defaulting in the payment of the mandatory 60 percent of the Joint Venture Partnership.
 
SPDC had threatened to sack over one thousand staff of its over 3,500 staff strength. This is apart from the move to fire 5,000 staff engaged as contract staff.

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An appeal for Shell shareholder support

The Sierra Club (Washington, DC – www.sierraclub.org)

…is planning to bring a shareholders’ resolution to Royal Dutch Shell’s 20 May 2008 AGM. The resolution focuses on risks to shareholder value from Shell’s operating in Alaska’s Beaufort and Chukchi seas. Sierra’s concerns include the company’s failing to report on possible impact to value from operating in the Arctic oceans and failing to assess reputational risk from an oil spill in Alaskan waters, particularly one that impacts threatened marine mammals such as polar bear.

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BBC News: Q&A: Windfall tax on Shell

Thursday, 31 January 2008, 12:04 GMT 

The Unite union has called for the government to impose a windfall tax on the profits of oil companies after Royal Dutch Shell reported record profits for a UK-listed company.
“Shell shareholders are doing very nicely whilst the rest of us, the stakeholders, are paying the price and struggling,” said its joint general secretary Tony Woodley.

Would a windfall tax be a good idea?

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Daily Telegraph: Lawyers close in on Shell chiefs

By Russell Hotten
31/01/2008
Front page of Daily Telegraph Business Section

The accounting scandal that forced resignations and fines at Royal Dutch Shell in 2004 looks like returning to haunt the company, with lawyers pursuing legal action on behalf of US shareholders about to step up their campaign for compensation.

Following years of wrangling, key Shell executives involved in the 2004 “oil reserves” affair appear ready to give sworn statements to the lawyers about their role in what was the biggest crisis in the company’s history.

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