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FT Energy Source: Saudi Reform

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By Ed Crooks: April 29, 2016

When Saudi Arabia’s oil minister raises an eyebrow, the world pays attention. So when the kingdom launched a hugely ambitious economic reform programme this week, it naturally attracted enormous interest.

The FT in an editorial praised what it described as “a bold bid to transform Saudi Arabia’s economy”, but highlighted the challenges Deputy Crown Prince Mohammed bin Salman would face in making his vision a reality. Simeon Kerr and Anjli Raval described the plans as “highly ambitious – some would say unrealistic”.

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Oil prices drop faster than companies can cut costs

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Bloomberg News: SATURDAY, APRIL 23, 2016

The world’s biggest oil companies, set to report their worst quarterly earnings in more than a decade, are finding that their cost-cutting efforts haven’t matched the decline in crude prices over the past two years.

While producers have been deferring projects, eliminating jobs and freezing salaries, the process will take three years to complete, according to Barclays oil sector analyst Lydia Rainforth. In the meantime, profits are being hammered.

“A lot of work still needs to be done on costs,” she said. “It’s a reflection of how much costs had piled up and how long a process this is.”

For producers from Royal Dutch Shell to Chevron, reeling under the threat of credit-rating downgrades, slashing costs is the surest way of protecting balance sheets. Still, reversing course is proving painful after $100 oil persuaded companies to pump money into expensive areas in search of new deposits, hire more people and rent rigs and services at record rates. Productivity suffered.

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Exxon Mobil Corporation, Chevron Corporation: Oil Slump Persists, Compensation Packages Take a Nosedive

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By Micheal Kaufman on Apr 14, 2016

The oil slump has persisted for over 18 months now and it’s not surprising that several small and mid-sized companies have yielded to bankruptcy and debt pressures. Previously, the Street analysts were optimistic about the future outlook and the profitability of the oil giants; however, those expectations were reversed when the market situation took a turn for the worse in January.

The oil majors undertook several measures to tackle the slump. For starters, they lowered their capital and operating expenditures, went forth with mergers and acquisitions and debt and equity financing. They have taken the decision to reduce top executives’ pay amid one of the worst commodity downturns in the industry.

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Royal Dutch Shell plc: Reasons Behind Moody’s Downgrade

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By Micheal Kaufman on Apr 11, 2016

Moody’s Investor Service reduced Shell’s issuer rating and rating of its guaranteed debt from “Aa1” to “Aa2”, and affirmed company’s Prime-1 commercial paper. Both ratings were under review for a potential downgrade, which was initiated on January, 22, 2016. Since January, the firm expected that the global oil prices will remain weak over the medium term and hinted several downgrades in the upcoming few months.

Shell Finance Netherlands Bv, a subsidiary of Royal Dutch Shell – formed for the sole purpose of issuing debt – also had its issuer rating cut from “Aa1” to “Aa2”. Moreover, Shell’s US-based subsidiary, Shell Oil Company, also got its issuer rating cut from “Aa2” to “Aa3” and has been assigned a Negative outlook.

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Exxon and Shell Double Down to Defeat Climate Change Legislation

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Screen Shot 2016-04-08 at 15.55.29Nika Knight, Common Dreams: April 8, 2016

The dark channels through which corporations influence legislation are notoriously hard to trace, but a new detailed report estimates that the world’s largest fossil fuel companies are spending upwards of $500 million per year to obstruct climate laws.

Published Thursday by the UK-based non-profit InfluenceMap, the report looked at two fossil fuel giants (ExxonMobil and Royal Dutch Shell) and three trade lobbying groups, discovering that all together the five companies spend $114 million dollars a year to defeat climate change legislation.

More significantly, InfluenceMap says, “Extrapolated over the entire fossil fuel and other industrial sectors beyond, it is not hard to consider that this obstructive climate policy lobbying spending may be in the order of $500m annually.”

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Shell under pressure to reduce spending

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Markets | Fri Apr 8, 2016 3:05am EDT

By Ron Bousso

LONDON, April 8 Royal Dutch Shell is under pressure from shareholders to cut annual spending below $30 billion after buying BG Group to ensure it can maintain its dividend given the slow oil price recovery.

Shell and other large oil companies slashed budgets, scrapped huge projects and cut tens of thousands of jobs last year in the face of a slump in oil prices from a June 2014 peak of nearly $116 a barrel to below $40.

Shell reduced spending by $8.4 billion to $28.9 billion last year and for the first time in more than three decades global capital spending in the oil and gas industry, known as capex, is set to fall for a second year in a row.

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Shell is streamlining its operations in Malaysia and Norway following its merger with BG Group

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By Micheal Kaufman on Apr 6, 2016

Royal Dutch Shell plc (ADR) (NYSE:RDS.A) has shipped a cargo of Bintulu condensate from Malaysia to New Orleans, Louisiana, Reuters reported citing a trade source familiar with the matter. This is the first time that the US is importing this type of a condensate from Malaysia.

According to news sources, the Polaris, vessel containing 200,000 barrels of the offshore oil produced by the Malaysian state oil giant, Petronas, left the Malaysian terminal in February. The tanker stopped at Singaporean port, before heading towards Louisiana.

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Shell Ukraine head moves on after challenging tour of duty in Ukraine

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Shell Ukraine head moves on after challenging tour of duty in Ukraine

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Screen Shot 2016-03-15 at 10.34.57Apr. 02, 2016

After four years in Kyiv, Graham Tiley, Shell’s country chairman in Ukraine, is moving on to a new post in London.

Peter Kerekgyarto, Shell’s operations manager for Central and Eastern Europe, will assume the post of Ukraine country head as well as general manager of the retail business as of April 1.

Tiley was also the chairman of the board of the American Chamber of Commerce, and was replaced by Steven Fisher, CEO of Citibank Ukraine, on March 31.

Before the EuroMaidan Revolution in 2013, Ukraine was poised to become the world’s next exploration success story. Some of the world’s largest oil and gas companies, Shell, Chevron, Eni and ExxonMobil, entered the market, committing to invest millions of dollars into the industry.

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Oil giants replace 75pc of production in 2015

Screen Shot 2016-03-28 at 11.18.24By SARAH KENT: March 27, 2016

LONDON—The world’s biggest oil companies are draining their petroleum reserves faster than they are replacing them—a symptom of how a deep oil-price decline is reshaping the energy industry’s priorities.

In 2015, the seven biggest publicly traded Western energy companies, including Exxon Mobil Corp. and Royal Dutch Shell PLC, replaced just 75% of the oil and natural gas they pumped, on average, according to a Wall Street Journal analysis of company data. It was the biggest combined drop in inventory that companies have reported in at least a decade.

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Shell worries about climate change, but decides to continue making it worse

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Screen Shot 2016-02-17 at 08.47.47By Katie Herzog on 14 Mar 2016

Shell Oil released its 2015 annual review last week, and the most surprising thing in it may be how concerned the company is with climate change. It’s hardly what you’d expect from Big Oil, and yet the words “climate change” occur 15 times in the 228 page report. While this may seem minor, it’s a hell of a lot more than climate change is discussed by most other oil monsters (Looking at you, Exxon). Shell, unlike many oil giants, actively acknowledges and even embraces climate action — at least, on paper. “It was encouraging to see governments reach a global climate agreement in Paris in December,” the report reads. “The agreement should now encourage countries to develop policies that balance environmental concerns with enabling a decent quality of life for more people.”

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Time to End ‘Blood Oil’ Disaster in the Niger Delta

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By Richard SteinerProfessor and conservation biologist, Oasis Earth (www.oasis-earth.com): 10 MARCH 2016

The Niger Delta’s legendary “blood oil” disaster has persisted for decades, and is now deepening. Oil in the Delta fuels a dangerous mix of environmental devastation, a violent militancy that has killed thousands, human rights abuses, corporate greed and exploitation, epidemic corruption, massive oil theft, sabotage, repression, poverty, anger and despair. It is time to put an end to this ongoing atrocity, once and for all.

The 30,000 square mile Niger Delta — including rich coastal waters, islands, mangroves swamps, and rainforests — was once one of the most productive and diverse ecological habitats on Earth. But today, after 60 years of oil extraction, the region’s environment and society are devastated — a textbook example of the “oil curse.

The Delta is arguably the most severely oil-damaged environment anywhere in the world. A decade ago, our team of scientists conducting an oil damage assessment in the Delta estimated that each year, some 250,000 barrels (10 million gallons) of oil spill there, an amount comparable to that of the 1989 Exxon Valdez spill in Alaska — each year for 50 years. Oil operations have also caused extensive habitat degradation from road building, forest clearing, dredging and filling, thousands miles of pipelines, and chronic pollution from gas flaring and drilling wastes.

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Shell Seen as Best Oil Major Wager by Analysts After BG Deal

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Screen Shot 2016-02-17 at 08.47.47By Rakteem Katakey: Bloomberg.comMarch 9, 2016

Ben Van Beurden staked his reputation on Royal Dutch Shell Plc’s $53 billion acquisition of BG Group Plc as crude slumped. Analysts are rewarding the chief executive officer by putting the enlarged company in pole position to exploit a market upturn. 

Shell’s shares will rise about 12.2 percent in the next 12 months, the most among the world’s six biggest non-state oil companies, according to the target prices of analysts compiled by Bloomberg. More than 65 percent of analysts who cover Europe’s largest oil producer recommend buying the stock, the highest share among its peers.

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Did Shell’s Failure to Disclose Climate Risks Break the Law?

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Screen Shot 2016-02-17 at 08.47.47Congressmen who have asked the Securities and Exchange Commission to investigate Exxon now request a similar probe of Shell.

BY DAVID HASEMYER, INSIDECLIMATE NEWSMAR 7, 2016

Three members of Congress have asked the Securities and Exchange Commission to investigate whether Shell Oil Co. violated securities laws by failing to adequately disclose material business risks from climate change.

Members of the House Oversight and Government Reform Committee, led by California Democrat Ted Lieu, said in a letter to the SEC that Shell understood the consequences of climate change and made business decisions based on that knowledge. 

“Yet, Shell funded and publicly engaged in a campaign to deceive the American people about the known risks of fossil fuels in causing climate change,” the lawmakers said in their letter to SEC Chairwoman Mary Jo White.

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Shell/Exxon NAM JV Simulated Groningen Gas Field Earthquakes

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By John Donovan

EUcentre, the Italian research institute is carrying out simulated earthquake vibration tests on a house built in Italy to resemble a workers house in the province of Groningen in the Netherlands.

The test property is exposed to vibration similar to the vibration from an earthquake. This allows the EU centre to examine how the house behaves during an earthquake.

The researchers carry out the vibration intensity, also called ground acceleration, up until the time that the structure is no longer stable. It is claimed that the strength of the vibration is much heavier than earthquakes that have occurred thus far in Groningen.

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Woodside Appoints Former Shell Senior Executive Ann Pickard as Director

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Monday, February 29, 2016

Woodside Petroleum Ltd. announced Monday that its Board has appointed Ann Pickard as a non-executive director effective Feb. 29. Pickard joins Woodside as an independent director.

Woodside Chairman Michael Chaney said that Pickard had significant international business experience.

“The directors are delighted that we have been able to attract a person of Ms Pickard’s background and experience to the company’s Board,” Chaney said.

On Feb. 1 Pickard retired from Royal Dutch Shell plc, where she held numerous positions during her 15-year tenure with the company. Before her retirement from Shell, Pickard served as executive vice president, Arctic and was responsible for Shell’s Arctic exploration efforts. This followed three years as Executive Vice President of Shell’s Exploration and Production business and Country Chair of Shell in Australia, and five years as Executive Vice President, Africa. Pickard joined Shell in 2000 after an 11-year tenure with Mobil prior to its merger with Exxon.

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Are BP and Royal Dutch Shell Refinery Segments in Trouble?

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By Muhammad Ali Khawar on Feb 26, 2016

The oil and gas companies have been severely hit by a more than 70% crash in crude oil prices over the past one and a half year. Their only saving grace, however, is the high refinery margin. In 2015, the falling revenue of oil giants from the upstream segment — the likes of Exxon Mobil Corporation (NYSE:XOM), Shell, and BP — was offset by the high margins from the refinery segment.

Bidness Etc here discusses whether in 2016, the energy companies will continue to enjoy the oil refinery boom, or the glut in the downstream segment would weigh down the energy companies’ performance.

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Another Oil Crash Is Coming, and There May Be No Recovery

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Tom Randall: Bloomberg.com: 24 FEB 2016

It’s time for oil investors to start taking electric cars seriously.

In the next two years, Tesla and Chevy plan to start selling electric cars with a range of more than 200 miles priced in the $30,000 range. Ford is investing billions, Volkswagen is investing billions, and Nissan and BMW are investing billions. Nearly every major carmaker—as well as Apple and Google—is working on the next generation of plug-in cars.

This is a problem for oil markets. OPEC still contends that electric vehicles will make up just 1 percent of global car sales in 2040. Exxon’s forecast is similarly dismissive. 

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For Exxon and Shell, Age of Ultramajors Comes at the Wrong Time

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As oil and gas prices have tumbled, Exxon and Shell have been forced to retreat. With oil barely above $30 a barrel, they’re cutting spending, including some costly, high-risk mega-projects. Photographer: George Osodi/Bloomberg

By Javier Blas: Bloomberg.com: 24 FEB 2016

Despite their size, both companies suffering with cheap oil

Exxon and Shell cutting spending as fast as everyone else

Screen Shot 2016-02-24 at 07.54.19This may not be the best time to be bigger than big.

The $64 billion tie-up of Royal Dutch Shell Plc with BG Group Plc and the steady growth of Exxon Mobil Corp. are creating a new league of two: the ultramajors. Executives at smaller companies are even starting to joke that Chevron Corp., Total SA, BP Plc, ConocoPhillips and ENI SpA are merely the mid-cap sector of Big Oil.

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Members of Congress call for investigation of Shell over climate change

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Ivan Penn: 18 FEB 2016

A Southern California congressman and two other representatives are calling for an investigation of Shell Oil over whether it deceived the public on climate change at the same time it was preparing its business operations for rising sea levels. 

In a Feb. 17 letter to U.S. Atty. Gen. Loretta Lynch, the three members of Congress said growing evidence suggests there may have been “a conspiracy between Shell, Exxon Mobil and potentially other companies in the fossil fuel industry.”

U.S. Rep. Ted Lieu (D-Torrance) sent the letter along with Rep. Peter Welch of Vermont and Rep. Matt Cartwright of Pennsylvania, both Democrats.

Their letter cites an investigation published by the Los Angeles Times that reported that in 1989 Shell Oil announced it was redesigning a long-term, $3-billion natural gas platform in the North Sea to deal with rising sea levels from global warming. Despite this and other incidents, the congressmen noted, “Shell apparently decided to fund climate deniers.”

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Shell Passes Chevron To Become No. 2 Oil Giant

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Screen Shot 2016-01-26 at 08.12.50Tuesday 16 February 2016

London-listed Royal Dutch Shell has overtaken California-based Chevron to become the world’s second biggest non-state owned oil company.

The move comes after Shell completed the acquisition of BG Group which nudges its value to £133bn – now in excess of Chevron £112bn market capitalisation.

The £36bn acquisition of BG group by the Anglo dutch company was completed on February 15 having first been mooted in April 2015.

The deal – the industry’s biggest this decade – comes against a backdrop of falling oil prices.

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Shell pursues transition plan after sealing $53 billion BG deal

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LONDO | BY RON BOUSSO: Monday Feb 15, 2016

Royal Dutch Shell (RDSa.L) on Monday sealed the $53 billion (36 billion pounds) acquisition of British rival BG Group to form the world’s top liquefied natural gas company, even as slumping oil prices cast a shadow on the upcoming years of transition.

The success or otherwise of the complex merger will define the legacy of Shell Chief Executive Ben van Beurden, seeking to transform Shell into a more specialized group focused on the rapidly growing LNG market and deepwater oil production.

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Oil majors’ business model under increasing pressure

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Ed Crooks in New York and Chris Adams in London: 14 FEB 2016

Gorgon, a massive liquefied natural gas project off the north-west coast of Australia, is one of the wonders of the modern age. Its $54bn price tag makes it — in nominal terms at least — one of the most expensive engineering projects ever completed. It could also be a monument to a fading era, the last hurrah of Big Oil. In this view of the world, the price crash has been like an asteroid strike: agile shale producers can survive, but the lumbering dinosaurs of big oil are doomed.

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Stung by Low Oil Prices, Companies Face a Reckoning on Debts

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The oil industry regularly undergoes booms and busts. But the downside of this cycle may prove more extreme…

By CLIFFORD KRAUSS and MICHAEL CORKERYA version of this article appears in print on February 10, 2016, on page A1 of the New York edition

MIDLAND, Tex. — On the 15th floor of an office tower in Midland looms a five-foot-long trophy black bear, shot by the son of an executive at Caza Oil & Gas. But it is Caza that has recently fallen prey to a different kind of predator stalking the Texas oil patch: too much debt.

While crude prices have dropped more than 70 percent over the last 20 months, a reckoning in the nation’s vast oil industry has only just begun. Until recently, companies were able to ride out the slump using hedges to sell their oil for higher than the low market prices.

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As Big Oil shrinks, boards plot different paths out of crisis

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Screen Shot 2016-02-07 at 09.14.51* Companies seek to safeguard growth for when market recovers

* U.S. firms abandon deepwater projects for shale oil fields

* Britain’s BP bets on Egyptian gas, Shell on major acquisition

By Ron Bousso and Terry Wade

LONDON/HOUSTON, Feb 7 As oil and gas companies cut ever-deeper into the bone to weather their worst downturn in decades, boards have adopted contrasting strategies to lead them out of the crisis.

Crude prices have tumbled around 70 percent over the past 18 months to around $35 a barrel, leading to five of the world’s top oil companies reporting sharp declines in profits in recent days.

Executives at energy firms face a tough balancing act: they must cut spending to stay financially afloat while preserving the production infrastructure and capacity that will allow them to compete and grow when the market recovers.

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Royal Dutch Shell plc and BG Group plc merger

Screen Shot 2016-02-06 at 08.47.20By Brett Owens: Forbes.com: 6 Feb 2016

The Royal Dutch Shell plc ADR (RDS.A) and BG Group plc ADR (BRGYY) merger, which looked liked such a win-win for everyone has grown a bit complicated as the deal nears completion. The premium has shrunk, as have the benefits of the merger with prices under $90 a barrel.

However, there are still some takeaways for investors to breathe easier about. First, Shell has never cut or suspended its dividend in 40 years. That includes the late 1980s when oil was at $10. And despite a 56% drop in fourth quarter profits, the firm has reiterated it will maintain its dividend for 2016.

The firm has delayed capital expenditures and cut spending. It plans to slash another 3% of its employees this year after the merger.

The Shell BG merger increases Shell’s reserves by 25% and its output by 20%. More importantly, it makes Shell a well positioned producer of LNG – a segment that is growing internationally as oil declines. The merger takes Shell from third to the second largest public oil producer by capitalization after Exxon.

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The world’s most hated company: can NGOs help turn Shell’s reputation around?

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While Shell’s plummeting profits are partially due to the falling price of oil, the years of negative publicity surrounding the company have likely also had an effect…

Alison MoodieSaturday 6 February 2016 14.00 GMT

In mid-2015, Shell realized its project in the Chukchi Sea, off the coast of Alaska, was in trouble. After nearly a decade of expensive drilling, it still hadn’t yielded results and increasingly strict regulations were making it harder to operate. Plus, there was the small issue of public opinion, which, inspired by an aggressive campaign by Greenpeace, was turning against the company. 

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For Oil Companies, It’s a Year of Slashing Costs and Jobs

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This year will be another hard one for the oil majors as they cut spending.

Over the past several weeks, the world’s biggest oil companies have posted earnings that show just how brutal it is these days to be an oil major. The industry is going through the biggest downturn since the 1990’s.

Following a dramatic 60% plunge in oil prices over the past 18 months, oil companies are desperately slashing costs by cutting jobs, decommissioning rigs, halting the purchase of new oil gear, and pulling back from exploring new fields.

On Tuesday morning, BP BP -8.45% reported its worst annual loss in over 20 years. The company, which is the sixth largest in the world, says it will cut 7,000 jobs by 2017, or almost 9% of its workers.

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Will 2016 Be Royal Dutch Shell’s Worst Year Yet?

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There is a lot of pessimism regarding shares of Royal Dutch Shell (NYSE:RDS-A) (NYSE:RDS-B). Despite strong cash flow results behind its less-than-stellar earnings results, shares of Shell have been sinking faster than its Arctic drilling rigs (too soon?).

Over the past 18 months, the company has lost more than half of its market capitalization while its largest peers, ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX), have seen more modest declines.

Unlike ExxonMobil and Chevron, which are continuing with business as usual with their development plans and slowing capital budgets, Shell is also in the middle of a transformative acquisition that could shape the company’s future for decades. With that added uncertainty of what Shell will look like post BG Group merger, and oil prices in the $30 per barrel range, some investors may be wondering if 2016 will be a rough one to be a shareholder.

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Shell shareholders vote in favour of £40bn BG takeover

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By Jillian Ambrose: 12:35PM GMT 27 Jan 2016

Shell shareholders have given the nod to the £40bn takeover of BG Group by a strong majority.

The 83pc vote in favour of the plans paves the way for the creation of Britain’s largest public company, pending a separate vote by BG shareholders on Thursday which is widely expected back the plans.

The vote, at an extraordinary meeting in the Hague, concludes a nine month gauntlet of global regulatory hurdles, since when plunging oil prices have raised serious concerns that Shell’s offer was overpriced.

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Oil Giants Start Losing Safety Net as Refining Margins Squeezed

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Rakteem Katakey and Firat Kayakiran: Bloomberg.com: 19 JAN 2016

Refining profits that buttressed earnings for Exxon Mobil Corp. and Royal Dutch Shell Plc as crude prices plunged are now slumping, further pressuring all of the world’s biggest oil companies as they move into 2016.

Global refining margins, the estimated profit from turning oil into gasoline and diesel, fell 34 percent in the fourth quarter, the steepest decline in eight years, to $13.20 a barrel, data on BP Plc’s website show. Every $1 drop cuts BP’s pretax adjusted earnings by $500 million a year, according to its website.

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Shell’s Earnings to Show Depth of Rout as Oil Extends Losses

Screen Shot 2016-01-18 at 14.27.35Shell will on Wednesday become the first major oil producer to announce annual earnings as it enters the final stages of its plan to buy BG Group Plc in the industry’s biggest deal in years. Investors will scrutinize those preliminary numbers for signs Europe’s largest oil company is doing enough to justify the acquisition as crude drops below $30 a barrel. 

Shell has cut thousands of jobs and reduced spending as Chief Executive Officer Ben Van Beurden prepares the company for a prolonged downturn while looking to BG to add production and cash flow. The 18-month slump in crude, the longest since the mid-1980s, has delayed $380 billion of investments in the industry, driven down profits and erased more than $2.7 trillion of oil companies’ market value.

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Shell the company most criticised by campaigners

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Sunday 17 JAN 2016

German carmaker Volkswagen was one of the “most disliked” companies for pressure groups last year following its emissions scandal, a survey has found.

Shell was the most criticised by campaigners, followed by Monsanto, which makes genetically modified food.

Half of the top-10 most criticised companies on Sigwatch’s list were energy firms, because of “the elephant in the room – climate change,” Mr Blood said.

Top was Shell, but TransCanada, ExxonMobil, EDF and BP also featured.

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Is Royal Dutch Shell A Buy At 52-Week Lows?

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Extracts from an article by Mihir Mehta: 11 Jan 2016

Summary

Shell has had a bad start to 2016 and is trading close to its 52-week low, but investors should not consider this as an opportunity despite a strong balance sheet.

Shell’s strong balance sheet is overshadowed by the fact that its gross margin has declined and leverage has increased as compared to big oil players such as Exxon and Chevron.

Shell’s leverage growth of 32% is almost four times higher than BP’s leverage growth, indicating that its interest burden has increased at a faster pace than rivals.

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Big Oil braced for global warming while it fought regulations

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Screen Shot 2015-10-26 at 21.23.40As many of the world’s major oil companies — including Exxon, Mobil and Shell — joined a multimillion-dollar industry effort to stave off new regulations to address climate change, they were quietly safeguarding billion-dollar infrastructure projects from rising sea levels, warming temperatures and increasing storm severity.

By AMY LIEBERMAN AND SUSANNE RUST: DEC. 31, 2015

A few weeks before seminal climate change talks in Kyoto back in 1997, Mobil Oil took out a bluntly worded advertisement in the New York Times and Washington Post.

“Let’s face it: The science of climate change is too uncertain to mandate a plan of action that could plunge economies into turmoil,” the ad said. “Scientists cannot predict with certainty if temperatures will increase, by how much and where changes will occur.”

One year earlier, though, engineers at Mobil Oil were concerned enough about climate change to design and build a collection of exploration and production facilities along the Nova Scotia coast that made structural allowances for rising temperatures and sea levels.

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Royal Dutch Shell Looks To Curtail Capital Spending On Current Down Cycle In Global Oil Prices

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Screen Shot 2015-11-20 at 08.55.47Trefis Team Contributor: DEC 30, 2015 

Oil & Gas companies across the globe are choosing to curtail capital expenditures even though it might mean the loss of growth in future production. Royal Dutch Shell Plc. is also adopting this strategy and recently announced that it is revising its capital spending estimates for 2016. This announcement is the latest in a spate of cost cutting decisions the company has taken in the wake of the extended period of low crude oil prices. We believe that this is the right way forward for Royal Dutch Shell in the near term, and these measures will be beneficial in maintaining the company’s cash profit margins till oil prices begin to recover in the long run.

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Royal Dutch Shell makes deeper cuts

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By Daniel J. Graeber: Dec. 23, 2015

THE HAGUE, Netherlands, Dec. 23 (UPI) — With the company expecting improved efficiency after merging with BG Group, Royal Dutch Shell said it plans to cut spending for next year more than expected.

Shell published a prospectus and circular related to its $7 billion tie-up with BG Group, one of the largest mergers of its kind since Exxon and Mobil joined in the 1990s.

“The combination with BG is a strong platform to refocus the company, to create a simpler and more competitive Shell,” Shell Chief Executive Ben van Beurden said in a statement. “At the same time, Shell is pulling multiple levers to manage through the current oil price downturn.”

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The many reasons why Shell’s deal with BG will happen in 2016

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How idiotic would its board look if it ditched its current bride at the altar, only to see her hook up with a rival in a few months’ time?

Jim Armitage: Wednesday 23 Dec 2015

It will be the first big test of 2016: will Shell press on with its takeover of BG when the oil price is stubbornly below $40 a barrel? Today, it gave a clear “yes” by publishing its full merger documentation and posting the paperwork out to shareholders. If it was not planning to press on with the deal, it would have found some excuse why not to do so.

The documents rap out a series of reasons why the current bombed-out oil price is not relevant to the logic of integrating these two vast companies. The deal will bring so many efficiencies, Shell promises, that its hallowed dividend will be safer, bringing in more cashflow to pay into the divi pot at as low as $50 a barrel. Few people really think crude is likely to stay below that for decades to come. And, as far as the value of the combined assets goes, it can breakeven at the low $60s, Shell adds.

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Oil price slide unlikely to scuttle Shell’s takeover of BG

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…rejection of the takeover could entail losses all round, making it more painful for those with shares in both companies. BG shares would likely collapse…

LONDON | BY RON BOUSSO, KAROLIN SCHAPS AND SINEAD CRUISE: Thu Dec 17, 2015

Royal Dutch Shell’s takeover of BG Group may look less attractive after the slide in oil prices but the fact the same investors own nearly half of both firms means the deal is still likely to go through.

Investors holding about 43 percent of Shell’s shares also hold 53 percent of BG, according to Reuters data. For example, Blackrock, Franklin Mutual Advisers and Norges together hold more than 12 percent of Shell and nearly 7.5 percent of BG.

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BP plc, Royal Dutch Shell and Others up in Arms against Coal

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By Micheal Kaufman on Dec 2, 2015

Environmentalists are winning the race against energy companies, as the world tries to adopt environmental-friendlier ways of energy generation. World leaders from over 19 countries and prominent personalities such as Bill Gates and Mark Zuckerberg are at the UN Climate Summit in Paris, which has been ongoing from November 30 and will continue until December 11.

Energy Companies Coming in Front

The growing concern over global warming and rising temperatures has lined up global energy companies such as Royal Dutch Shell, BP plc. (ADR) (NYSE:BP) and Total SA (ADR) (NYSE:TOT). These companies have recently teamed up to support climate change and asked authorities to consider a carbon tax.

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Royal Dutch Shell, Exxon Mobil and Glencore: Energy companies risk wasting trillions on uneconomic projects

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By Jessica Morris: 25 November 2015

Energy companies risk wasting $2.2 trillion (£1.46 trillion) on uneconomic projects over the next 10 years, according to a new report.

Think tank the Carbon Tracker Initiative’s (CTI) report how fossil fuel firms risk destroying investor returns says energy companies’ focus on fossil fuels at the expense of emerging clean technologies could put them out of kilter with environmental regulation, which will eventually dampen demand.

It comes ahead of next week’s Paris Climate Change Conference (COP21) which is expected to result in, or at least pave the way for, more climate change legislation.

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Some Thoughts On Royal Dutch Shell’s Dividend In 2016

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Screen Shot 2015-11-20 at 08.55.47Casey Hoerth, Casey’s Finance Journal (Blog) Nov. 25, 2015 

Summary

Shell expects substantial cost savings and capex cuts in 2016.

Dividend sustainability in 2016 will depend on Brent crude prices.

At this time, I prefer companies that can actually acquire with oil at these prices.

Back in April, I wrote that Royal Dutch Shell’s (NYSE:RDS.A) dividend, while sustainable in the short term, would be hard to maintain in the long run if crude oil prices remained as low as they were. From what we’ve seen since April, it looks as if crude indeed wants to remain lower for longer.

Just last week, Shell had its Investor Day for 2016, where the company explained its vision for the coming year. This time around, the company didn’t center its presentation on full-year cash flow guidance for 2016. That’s because crude prices have been volatile to the point of full-year guidance being less than valuable. That, in turn, makes it difficult to get a handle on dividend sustainability for next year. This article focuses on a few things important to the company’s dividend: cash flow and capital expenditures.

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Gas Field quakes hit Dutch dykes

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Screen Shot 2015-11-24 at 08.13.11Senay Boztas AMSTERDAM: 22 Nov 2015: Sunday Times

THE Dutch are being forced to earthquake-proof their dykes after a spate of tremors blamed on the effects of extracting gas from the vast field running beneath the country.

Although Holland lies far from any big geological fault lines, half a century of exploitation of the Groningen field – Europe’s largest – is blamed for causing about 50 earthquakes a year.

The government is considering how much it should reduce lucrative gas production, which has been a mainstay of the Dutch economy throughout the financial crisis.

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Shell to decide on Ormen Lange subsea compression in 2016

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Screen Shot 2015-09-17 at 07.55.40STAVANGER, NORWAY: Business News | Thu Nov 19, 2015

Shell plans to decide next year whether to resume installing subsea compressors at its giant Ormen Lange field offshore Norway, a company’s senior executive said on Thursday, after stopping the project last year to save costs.

“We still expect in the course of 2016 that we will get to a point where we can see whether we can sanction a good development there or not,” Mark Wildon, a vice-president at Shell Norway, told Reuters on the sidelines of an energy conference.

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Safety risks prompt Dutch court to order cuts at Groningen gas field

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Screen Shot 2015-11-18 at 09.13.40Sectors | Wed Nov 18, 2015 4:33pm IST

By Anthony Deutsch and Toby Sterling

A Dutch court on Wednesday ordered more cuts in gas production at Groningen, Europe’s largest gas field, saying the government had given too little consideration to the stronger and more frequent earthquakes extraction had caused.

Output at the field, the world’s 10th largest, will now be capped at 27 billion cubic metres (bcm) per year from 33 bcm, the court said, adding that the government had failed to sufficiently weigh public safety risks.

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Dutch court orders more cuts in gas production

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Screen Shot 2015-11-18 at 09.13.40Wednesday 18 November 2015

[JURIST] The Dutch Council of State [official website, in Dutch] on Wednesday ordered [judgment, in Dutch; press release, in Dutch] more cuts in gas production. The court came to this decision after stronger and more frequent earthquakes occurred in the Netherlands as a result of extraction. The Groningen [BBC backgrounder], the field in question, will be capped at 22 billion cubic meters (bcm) per year from 33 bcm, due to the government’s failure to weight public safety risks after earthquakes caused extensive damage in the Netherlands’ northernmost province. Due to the Groningen supplying 15 percent of Europe’s gas, the Court ruled [Reuters report] “should it turn out to be a relatively cold year, the maximum gas extraction can be raised to 33 billion cubic metres.” The government has twice this year reduced production from its original target of 39.4 bcm. The ruling applies to all production through October 2016.

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Shell finds 100 million oil barrels in deep-water Gulf discovery

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Posted on November 18, 2015 | By Collin Eaton

HOUSTON — Probing one of its recent discoveries in deep waters of the Gulf of Mexico, Royal Dutch Shell found 100 million barrels of oil equivalent buried at its Kaikias field, nearby three of its massive production facilities and a network of subsea pipes, the company said Wednesday.

The one-year-old Kaikias discovery, about 60 miles south of the Louisiana coast in the Mars-Ursa basin, is nowhere near the size of the big-ticket deep-water oil fields that Shell uncovered in that region two decades ago.

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Dutch Court to Rule on Gas Output From Europe’s Biggest Field

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Screen Shot 2015-11-18 at 09.13.40Anna Shiryaevskaya, Fred Pals and Kelly Gilblom: 18 November 2015: Bloomberg.com

  • Final ruling Wednesday on output from EU’s biggest gas field

  • Government plans to decide on future production in December

A Dutch court will Wednesday decide on the future of Europe’s largest natural gas field as local residents seek to stop tremor-inducing production that’s damaging their houses.

The Council of State will rule on whether production from the Groningen gas field should be limited after in September hearing appeals from about 40 individuals, housing corporations and environmental groups. That comes before the government plans to next month outline future output at the field, which generated about 10.7 billion euros ($11.4 billion) in revenue last year and also supplies Germany, Belgium and France.

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An Oil-Soaked Globe as Production Keeps Climbing and Demand Falls

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A version of this article appears in print on November 14, 2015, on page B1 of the New York edition

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HOUSTON — Such is the state of the oil industry these days that there is sometimes nowhere to put the oil. Off the coast of Texas, a line of roughly 40 tankers has formed, waiting to unload their crude or, in some cases, for a willing buyer to come along. Similar scenes are playing out off the coasts of Singapore and China and in the Persian Gulf.

There is little sign that the logjam will ease, as the price of oil continued its yearlong plunge this week, declining by nearly $10 a barrel.

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Ineos agrees shale gas deal with Shell and ExxonMobil

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A deal to supply energy giants Shell and ExxonMobil with American shale gas from the Ineos plant at Grangemouth has been hailed a “landmark agreement”.

The Fife Ethylene Plant (FEP) in Mossmorran will receive the ethane from US shale gas, which is obtained using the controversial hydraulic fracturing “fracking” technique, from the middle of 2017.

It comes after Ineos signed a long-term sale and purchase agreement with ExxonMobil, which owns and operates the FEP plant, and Shell, which has 50% capacity rights.

The FEP, which was officially opened by the Queen in 1986, was the first plant specifically designed to process natural gas liquids from the North Sea.

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Oil giants ‘face cascade of claims’

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Robin Pagnamenta Energy Editor: November 7, 2015

An investigation by New York’s attorney-general into ExxonMobil’s record on climate science could trigger a “cascade” of similar claims against other oil companies, including Britain’s BP and Royal Dutch Shell, legal experts have warned.

Prosecutors might seek to investigate other companies that helped to fund organisations that queried climate science, such as the Global Climate Coalition, of which BP and Shell were members during the 1990s, they said.

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