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Royal Dutch Shell CEO: Dividends No Longer No.1 Priority

One of our regular contributors has picked up on a priority switch by Shell senior management which may frighten shareholders in Royal Dutch Shell Plc.

During an interview with Michelle Fox of CNBC earlier today, Ben van Beurden the Chief Executive Officer of the company said: In terms of debt paydown and covering of dividends two important priorities – Debt No 1, Dividend No 2. 

Michelle Fox asks… When you say Dividend is number two does this mean you could change the level going forward?  Mr Van Beurden made reassuring noises about the dividend but noticeably did not backtrack on his relegation of dividend payment levels to being a secondary priority

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Ben van Beurden admits earnings figures do not “look good” for investors

Royal Dutch Shell Plc has today announced its disappointing fourth-quarter figures. The Company turned in one of its worst performances in more than a decade.”

The Telegraph says that the company has dashed investor hopes for a resurgence in profits. It reports that “for the year as a whole Shell deepened its losses in its exploration and production business from $2.2bn to $2.7bn”.

CNBC says that Ben van Beurden, CEO of Royal Dutch Shell Plc has conceded that the earnings figures do not “look good” for investors. Their article headline says: Shell posts earnings of $3.5 billion in 2016; an 8% slide from $3.8 billion in 2015

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Oil stocks surge, BP and Shell both climb on back of OPEC pact

Written by Reporter – 12/12/2016 1:20 pm

Oil stocks topped the FTSE 100 on Monday after non-Opec producers agreed to curb production to help buoy floundering crude prices.

The UK’s blue chip index was down 0.1% at around 6946.53 points, but Royal Dutch Shell’s ’B’ shares rose 3% and BP jumped 2.4%.

Away from the top tier, Tullow Oil soared 9.6% and Premier Oil surged 9.9%.

Sterling was flat against the dollar at 1.256, but down 0.3% against the euro at 1.187.

Brent crude prices climbed more than 5% to around 57.03 US dollars per barrel (£45.33) in early trading, marking its highest level since July 2015.

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Shell Makes Cuts to Boost Returns

Allen Good7 December, 2016

With the BG acquisition in the books, Shell (RDSB) is embarking on the necessary steps to compete in a world of $60 a barrel oil.

Like the rest of the integrated group, Shell is working to reduce its cost base, which has become bloated during the past five years, by reducing headcount and improving its supply chain.

The integration of BG is integral to Shell’s efforts, as it holds the potential for $4.5 billion of cost-reduction synergies. Furthermore, the addition of BG’s low-cost production reduces Shell’s per-barrel operating cost, which ranked among the highest in its peer group. In total, Shell aims to reduce operating cost by 20% from 2014 levels by the end of 2016, with further reductions possible in later years.

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screen-shot-2016-12-05-at-16-34-00 By The Motley Fool  Dec 5, 2016

Today I’m looking at the critical reasons to sell out of Royal Dutch Shell (LSE: RDSB).

A drop in the ocean

The oil sector’s major players breathed a huge sigh of relief last week after OPEC — responsible for four-tenths of the world’s oil supply — confounded the expectations of many and agreed to cut its output.

Saudi Arabia brokered a deal that will see production fall by 1.2m barrels per day, to 32.5m barrels beginning in January. The news prompted Brent oil to top the $55 per barrel marker for the first time since the summer of 2016.

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Shell is ‘ripe to deliver’ and 2017 is an inflection year – broker

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Jamie Ashcroft: 01 Dec 2016

Royal Dutch Shell Plc’s (LON:RDSB) portfolio is ‘ripe to deliver’, according to JP Morgan, which rates the stock as ‘overweight’ and sees 2017 as an inflection year for the oil supermajor.

JP Morgan analyst Christyan Malek says investors should buy ahead of further capex cuts and free cash flow uplift.

In a note Malek said: “the recent Brazil field trip left us incrementally positive on scope to cut capex further in 2017-18 as economies of scale on cost improve and internal efficiencies take effect.

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Shell jobs axed as report warns on future for oil market

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Wednesday 16 November 2016

Shell is to axe its Glasgow operation with the loss of 380 jobs as a new report warns of a “boom/bust” cycle in the oil industry.

The cuts are in response to the low oil price – which is already hurting the Scottish economy amid thousands of job cuts in North Sea production.

Shell said the decision to close its finance operation in Glasgow, which will take place by 2018, came about as it was taking “difficult choices” in order to remain competitive.

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Trump’s victory could hurt Royal Dutch Shell plc’s future

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By The Motley Fool  Nov 14, 2016

Donald Trump’s views on climate change may provide a boost to oil production in the US. He stated in his campaign that the US was being disadvantaged by rules and regulations aimed to prevent (or at least slow down) climate change. This could signal a more positive attitude from the US government towards oil and gas companies over the medium term.

Although there’s no certainty that Trump will follow through on his campaign policies when he becomes President, it seems likely that he’ll be less positive about battling the effects of climate change than Barack Obama. This could be bad news for Shell(LSE: RDSB).

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Trump energised

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By Ed Crooks, November 11, 2016

“Between a battle lost and a battle won, the distance is immense and there stand empires,” said Napoleon. The same is true of elections.

Donald Trump may have come slightly behind Hillary Clinton in the popular vote for the presidency, but his convincing victory in the electoral college will give him the ability to reshape the energy industry in the US and around the world.

His hand will be strengthened by Republican control of Congress. Parts of Mr Trump’s agenda will face resistance in Congress, but his energy policy is unlikely to be one of those areas. His support for oil, gas and coal, his commitment to deregulation and his rejection of climate policy are all well aligned with mainstream Republican thinking.

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FT: Western oil companies reach $5B deal with Nigeria

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Nov. 8, 2016 10:23 AM ET|By: Carl Surran, SA News Editor

Nigeria’s government has reached an outline settlement to resolve a dispute with western energy firms that would pay the companies $5B to cover exploration and production joint venture costs in the country, Financial Times reports.

Nigeria’s petroleum minister tells FT that Royal Dutch Shell (RDS.A, RDS.B), ExxonMobil (NYSE:XOM), Eni (NYSE:E), Chevron (NYSE:CVX) and Total (NYSE:TOT) accepted the settlement of costs incurred during 2010-15, and hopes a deal can be finalized by year-end.

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This bad news should encourage you to avoid Royal Dutch Shell plc!

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By The Motley Fool  Nov 7, 2016

Deal in danger

My bearish view on Royal Dutch Shell (LSE: RDSB) hasn’t improved over the weekend, either, following news of fresh bickering between OPEC members.

On Monday, OPEC’s Mohammed Barkindo was forced to deny that the wheels are not falling off its much-lauded supply freeze agreement, with the group’s secretary general announcing that all 14 member states remain committed to the deal.

But rumours that Saudi Arabia vowed late last week to raise its own production, should members fail to rubber-stamp the deal this month, negates any suggestion of cross-cartel unity. Some members like Iran have been exempted from cutting, or even holding, their own production, causing other group members to publicly call for similar exemptions. The political and economic ramifications of getting an agreement over the line are clearly colossal.

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Royal Dutch Shell: The Comeback Is Here

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Alpha Investor: Sunday Nov 6, 2016

Summary

  • Shell posted a massive turnaround in its bottom line last quarter on the back of an improved production profile, lower costs, and higher price realizations.
  • Shell’s financial improvement is set to continue going forward as upstream oil price realizations will continue to improve on the back of a positive demand-supply environment in the oil industry.
  • Oil demand has exceeded supply by 500,000 bpd this year and the trend will continue as the likes of Russia, Saudi Arabia, and the U.S. continue to reduce output.
  • Shell’s focus on lowering both operating and capital costs will allow it to attain break-even point even if oil prices remain at $50/barrel, which will also improve cash flow.

On Tuesday last week, Royal Dutch Shell (NYSE:RDS.A) (NYSE:RDS.B) reported impressive results for the third quarter. In fact, Shell was able to achieve a major turnaround in its bottom line performance, posting a profit of $1.4 billion as compared to a huge loss of $6.1 billion in the same quarter last year. This impressive turnaround in Shell’s bottom line was a result of an increase in production as compared to the prior-year period, driven by the acquisition of BG that led to a favorable production mix in the upstream segment.

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