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Is OPEC’s Output Deal A Game Changer For Royal Dutch Shell And BP?

Is OPEC’s Output Deal A Game Changer For Royal Dutch Shell And BP?

Royston Wild: Sept 29, 2016

Investors in the fossil fuel sector have finally had cause to celebrate this week after OPEC suggested that an output freeze could finally be in the offing.

The idea had initially been tabled at the start of the year as Saudi Arabia, Qatar, Venezuela and Russia got around the table. But Iran’s determination to get the pumps ramped back up to pre-sanction levels put the plan firmly on the backburner.

However, with Tehran’s reluctance to take part in a deal now apparently thawing, stock pickers have become more optimistic over the growth outlook for many of the oil industry’s major players.

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Shell’s Growth Priority Over The Next Five Years — Deepwater

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Trefis Team SEP 29, 2016 @ 08:42 AM

With the ever-growing energy needs worldwide, the conventional sources of energy are likely to exhaust soon. Having explored the majority of the onshore reserves, oil and gas producers around the globe are now moving to offshore reserves, that are primarily formations in deep waters, containing thick layers of oil and gas in permeable rock. Consequently, Deepwater drilling, often used to categorize drilling in water depths of greater than around 400 meters, has become an attractive alternative to onshore drilling. In line with this growing trend, Royal Dutch Shell (NYSE:RDS.A) has categorized Deepwater as one of its growth priorities for the next five years. (Also Read: Shell’s Growth Priority Over The Next Five Years – Chemicals) In this note, we discuss the growth potential of the deepwater market, Shell’s positioning in this market, and its strategy going forward.

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One Floating LNG Dream Sinks As Another Gets Ready To Float

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One Floating LNG Dream Sinks As Another Gets Ready To Float

Screen Shot 2016-03-15 at 10.34.57Unfortunately for Shell it formally committed to the Prelude development in May, 2011, a time when oil was selling for around $120 a barrel, three-times the current price of around $41/bbl.

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By Tim Treadgold: March 23, 2016

No-one blinked and share prices barely fluttered when a $40 billion plan by Australia’s Woodside Petroleum ngIf: ticker to develop a floating liquefied natural gas (LNG) project was torpedoed earlier today.

However, the knock-on consequences of sinking the Browse project will be felt most acutely at Europe’s biggest oil company, Royal Dutch Shell ngIf: ticker .

The immediate impact on Shell is that it has a 27% interest in the Woodside-led Browse LNG project, but it is also nearing completion of the world’s biggest floating LNG barge, the $12.6 billion Prelude project.

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Shell Oil CEO Says Petrobras Should Step Aside In Brazil

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Ben van Beurden, Chief Executive Officer of Royal Dutch Shell, said in Brazil on Feb. 15 that the government should allow for more foreign investment in the country’s lucrative off-shore oil fields without having to partner with beleaguered oil major Petrobras.

By Contributor: Kenneth Rapoza: 15 Feb 2016

Brazil’s government-owned oil giant, Petrobras, should cede some of its drilling rights to foreign firms, Royal Dutch Shell Oil CEO Ben van Beurden was quoted saying in Estado de Sao Paulo newspaper on Monday.

The Shell Oil man is arguing for greater private investment in Brazil’s precious off-shore oil fields in the Atlantic Ocean, rather than current rules that require 50% ownership by Petrobras. In theory, such a move would entice private oil firms to explore for more oil and keep it for themselves, rather than having to share half of it with Petrobras. That wouldn’t eliminate government royalties, of course, but it would give foreign firms like Shell the incentive to explore and develop deep water oil fields on their own.

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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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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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Gas Wars Down Under Finally Come To An End: Shell-BG Group Tie-Up Gets Green Light

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Royal Dutch Shell CEO Ben Van Beurden addresses a keynote speech during the World Gas Conference in Paris on June 2, 2015. Photo Credit:  ERIC PIERMONT/AFP/Getty Images)

Tim Daiss, CONTRIBUTOR: DEC 4, 2015

The proposed $70 billion Shell-BG Group mega deal, one of the largest energy deals in a decade, is now a reality, at least in Australia.

On Thursday, the Australian Foreign Investment Review Board (FIRB) gave the green light to the energy tie-up. The deal has already received regulatory approval in the US, EU and Brazil, while regulatory approval from Chinese authorities is still pending, but expected to be granted. The FIRB approval comes just two weeks after the Australian Competition and Consumer Commission (ACCC), the country’s competition regulator, approved the deal.

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Complications Grow For Shell-BG Deal

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Trefis Team, CONTRIBUTOR: NOV 27, 2015

…the Chinese authorities reviewing the proposed Royal Dutch Shell – BG Group merger are reportedly urging Royal Dutch Shell to dole out concessions on long-term liquefied natural gas supply contracts with the country.

After getting an all-clear from the Australian completion authority last week, Shell now needs clearance from China and Australia’s Foreign Investment Review Board for the deal to close as planned in early 2016.

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Big Oil Gears Up For $60 Break-even Price As Profits Sink

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Gaurav SharmaOCT 31, 2015

The latest quarterly results season is receding into the accounting archives, with BP, Royal Dutch Shell, Chevron and the keenly anticipated numbers of Exxon Mobil now with us.

That lower oil prices continue to dent profits at the world’s biggest oil companies is no longer news. Figures on their often unloved downstream operations performing well bring a few smiles and keep detractors of the integrated model quieter than usual.

Take big beast Exxon, which reported quarterly profits of $4.24bn, down 47% on an annualized basis from the same quarter last year. Its profits from refining doubled to about $2bn, but upstream takings fell 79% to $1.4bn. Prior to Exxon, smaller rivals (e.g. – BP, Shell and Chevron) had all posted declines in headline quarterly profits earlier in the week. Yet read between the lines of the profit declines, and a common message on how to cope seems to be emerging.

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Why We Believe Shell’s Stock Is Worth $62

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Screen Shot 2015-09-17 at 07.55.40Trefis Team, CONTRIBUTOR: Oct 16, 2015

Royal Dutch Shell Plc. is one of the world’s leading oil & gas companies with operations all across the globe. The company has been hit hard by the current downtrend of low crude oil prices and its average price realizations in both upstream and downstream segments have suffered as a result. Consequently, we believe that Royal Dutch Shell’s Trefis adjusted total revenue for the year 2015 will decline by close to 30% as compared to last year and amount to $337.3 billion (Calculated revenue figures not subjected to any intersegment elimination). However, we believe that a gradual recovery in oil prices in subsequent years will lead to a period of growth in Royal Dutch Shell’s revenues and the company’s revenues will be just shy of $450 billion by the end of our forecast period (2022). Our price target for Royal Dutch Shell stands at $62, implying a premium of more than 10% to the market. In this piece, we try to analyze some of the key drivers we have used in our valuation of Royal Dutch Shell.

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Can Royal Dutch Shell Sustain Its High Dividends?

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Screen Shot 2015-09-17 at 07.55.40Trefis Team, CONTRIBUTOR: OCT 7, 2015

Royal Dutch Shell‘s dividend yield has reached a high of over 8%, given that its stock price fell by almost 18% in the last three months. The company has committed to paying its current dividend for the current financial year despite the pressure on its net income. However, it is now uncertain whether the company will be able to sustain this dividend in the future. The market seems bearish on Shell’s growth prospects.Our current price estimate for Shell stands at around 30% above the market price. In our bear case scenario, our price estimate faces a 20% downside, based on a reduced forecast for global crude oil prices, Shell’s exploration success, and downstream EBITDA margins. However, we remain optimistic on Shell, given its long standing history of dividend payments, we believe that Shell will not initiate a dividend cut.

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Premium Times: Former Shell Executive Director Arrested in London on Corruption Allegations Involving Over $20bn

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…former board member of Shell Petroleum Development Company of Nigeria…

By Bassey Udo: 4 Oct 2015

The Nigerian presidency has confirmed the arrest of a former Petroleum Minister, Diezani Alison-Madueke, in London, over allegations of corruption and money laundering.

“The government is aware of the arrest and all the government investigative agencies are working very closely with the British law enforcement,” the Senior Special Assistant to the President, Garba Shehu, told PREMIUM TIMES exclusively on Sunday.

“Nigerian authorities are saying for the first time that matters are being handled with seriousness and deep commitment. Nobody wants to give the impression that this government is frivolous and unserious.

“For this reason, government is only confirming active collaboration. Beyond this, we are not saying more. In due course, Nigerians will be briefed on updates as appropriate.”

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