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Posts under ‘Oil Company Profits’

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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Shell: Industry faces major renaissance

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Written by Rita Brown – 09/02/2016

The industry is in the crux of its own renaissance as it grapples with job losses, low oil price and lagging efficiency, according to Shell’s project & technology director.

Speaking at GE’s annual meeting in Florence, Harry Brekelmans said: “Florence is the birthplace of the renaissance, the time of exploration of discovery and great inventions and of course the oil and gas industry is in need of its own renaissance.

“This will be how we collectively respond to the tough business environment we find ourselves in.

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Why Oil Production in Ogoniland is Still Impossible

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Why Oil Production in Ogoniland is Still Impossible

By Fegalo Nsuke: 

Shortly after the hangings on 10 November 1995, Shell Oil Company set up an Ogoni Re-entry department to help the company break the Ogoni resistance and pave the way for the resumption of oil mining in the area. That was Shell’s immediate response to the plight of the Ogoni people after the brutal killings of 9 leaders by the Nigerian government in 1995.

The government and Shell had thought that Saro-Wiwa’s killing would frustrate the Ogoni and ease the resumption of oil mining in Ogoniland. That was not to be as the people have consistently and persistently held on to the oil till date except in cases where agents of Shell have been reported to be stealing the Ogoni oil.

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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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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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Corporate earthquakes

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By Ed Crooks: February 5, 2016

Earnings reports from the largest listed oil companies have this week given a series of seismograph readings on the upheaval in the crude market. The implications for investors, employees and suppliers are grim. Worse, those earnings were all recorded in a period when oil and gas prices were significantly higher than they are now.

In a run of generally grim reports, BP’s was perhaps the worst: in 2015 it made a $5.2bn loss, the largest in its history. ConocoPhillips of the US, which after spinning off its refining business in 2012 became the world’s largest pure exploration and production company, was another standout, cutting its dividend by 66 per cent just two months after promising that the payout would be its “highest priority”.

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Shell to cut 10,000 jobs as profits plunge by 80 per cent

Screen Shot 2016-02-05 at 11.00.27Tom Bawden Environment Editor: 5 FEB 2016

Shell yesterday confirmed plans to cut 10,000 jobs now that its takeover of rival BG Group is set to go through, and raised the prospect of further redundancies, as it reported an  80 per cent slump in profits to a 13-year low.

Two days after BP announced its biggest-ever annual loss, Shell revealed that its profits had fallen to $3.8bn (£2.6bn) last year, from $19bn in 2014. The industry has been rocked by a sustained slump in the oil price, from $115 a barrel in the summer of 2014 to $35.41 yesterday. 

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Shell’s Profit Down 56 Percent on Depressed Oil Prices

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Screen Shot 2016-01-14 at 00.11.12Shell’s Profit Down 56 Percent on Depressed Oil Prices

By STANLEY REEDFEB. 4, 2016

LONDON — Royal Dutch Shell became the latest big energy company to file a damage report on the impact of depressed oil prices on Thursday, saying that its adjusted profit fell 56 percent in the fourth quarter of 2015 compared to a year earlier.

Shell said earnings adjusted for inventory changes were $1.8 billion, down sharply from $4.2 billion in the comparable period of 2014.

For 2015, Shell’s earnings fell 80 percent to $3.84 billion, compared to $19 billion in 2014.

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Shell Profits Plunge By 80% Amid Oil Slump

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Shell is pressing ahead with a £36bn ($52bn) merger with exploration group BG. It has said 10,000 jobs will go across the two companies as a result. The deal has been approved by shareholders and will complete later this month.

The industry has been hammered by the collapse in the world energy market which has seen the price of a barrel of Brent crude dive by three-quarters from $115 in the summer of 2014 to around $30 at the start of this year.

Mr van Beurden said Shell was seeing “substantial changes”, slashing costs and investment in response to the slump – and warned that more cuts could come.

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Shell confirms 10,000 job cuts and a steep profits fall

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Royal Dutch Shell has confirmed it is cutting 10,000 jobs amid its steepest fall in annual profits for 13 years.

It made $1.8bn (£1.23bn) for the fourth quarter of the year, compared with a $4.2bn profit for the same period the year before.

Full-year 2015 earnings, excluding identified items, were $10.7bn, compared with $22.6 billion in 2014.

The oil firm indicated it would report a massive drop in profits two weeks ago.

The company reports earnings on a current cost of supplies (CCS) basis.

Last week, shareholders in Shell, which is Europe’s largest oil company, voted in favour of its takeover of smaller rival BG Group.

The company cut back hard on investment.

Its capital spending for the year was slashed to $28.9bn, $8.4bn lower than in 2014.

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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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S&P downgrades Shell to A+/A-1; keeps door open to further downgrade

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Commodities | Mon Feb 1, 2016 9:28pm GMT

Credit ratings agency Standard and Poors on Monday downgraded oil major Royal Dutch Shell Plc to A+/A-1 from AA-/A-1+ and put its long-term credit rating on creditwatch negative citing sliding oil prices.

S&P said Shell’s one-notch downgrade, driven by weaker forecasts for its credit metrics over 2016-2018 and slower profit improvements, excluded the ratings impact of its BG Group Plc acquisition.

Shell had said it was prepared for a downgrade as a result of the BG deal.

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S&P cuts Shell’s credit rating amid oil rout

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1 FEBRUARY 2016

Standard & Poor’s sliced Royal Dutch Shell’s credit rating on Monday…

The New York-based ratings company lowered Shell’s rating by one notch to “A+” from “AA-” and said it may make more cuts in the future.

FULL ARTICLE

Shell and BP brace for profit massacre

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THE carnage unleashed by the crash in crude prices will be laid bare this week when Britain’s biggest energy companies unveil plunging profits, billions in write-downs and confirm thousands of job losses.

FULL ARTICLE

Pension funds at risk as BP and Shell’s near £10bn profits slump sparks dividend payouts fears

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By JON REES FOR THE MAIL ON SUNDAY31 January 2016

Britain’s biggest oil groups will this week report a near £10billion slump in profits as the calamitous effect of the low oil price takes its toll on the blue chip giants.

Both BP and Shell are expected to see their full-year profits for 2015 slashed by about 40 per cent leading to fears that they will struggle to maintain their dividend payouts to shareholders.

BP is predicted to report profit for the year of $6.8billion (£4.8billion) down from $12.1billion previously, while Shell is set to report profit down to $10.7billion (£7.5billion) from $19billion.

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Final approval for Shell mega-merger as BG Group shareholders vote in favour of the £36bn deal

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By LAURA CHESTERS FOR THE DAILY MAIL: 29 JAN 2016

One of the largest takeovers in history finally got the go-ahead yesterday after BG Group shareholders followed those at Royal Dutch Shell in approving the £36billion deal.

At a meeting in London, 99.53 per cent of BG shareholders voted in favour, a day after 83 per cent of Shell investors approved the deal that was first announced last April.

Shell chief executive Ben van Beurden said: ‘BG adds attractive deep water and integrated gas positions and will act as a catalyst for accelerating the reshaping of our business. 

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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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Why the Shell-BG mega-deal was risky for the City as well as the oil giants

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By Ashley Armstrong7:17PM GMT 27 Jan 2016

It has taken nearly 10 months, five competition regulators and 40 approvals from other global authorities. But Shell’s chief executive Ben van Beurden’s white-knuckle ride is finally drawing to a close.

On Wedensday, van Beurden won overwhelming support for the £40bn takeover from his shareholders. However, his celebrations may well be drowned out by raucous hedge funds who are cheering what one called “a very profitable trade”.

At Shell’s highly-anticipated shareholder vote in The Hague, the mood was serene, with van Beurden and chairman Charles Holliday warmly greeting shareholders, safe in the knowledge that the level of proxy vote support meant the decision was never in doubt.

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Shell Needs to Repay Investors Who Backed Its Biggest Ever Wager

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Screen Shot 2016-01-20 at 08.29.05By Rakteem Katakey: Bloomberg.com: 27 JAN 2016 – 5.06 PM GMT

Royal Dutch Shell Plc is under pressure to reward the faith of the more than 80 percent of shareholders who shrugged off the risks from slumping oil prices to back its record acquisition of BG Group Plc. 

That won’t be easy: the rout in crude has cut the value of Europe’s biggest oil company to the lowest in more than 10 years and raised investor concerns that its dividend is unsustainable.

Chief Executive Officer Ben Van Beurden, who expended a lot of political capital convincing investors that BG will help Shell ride the downturn, has to deliver promised benefits from liquefied natural gas to deepwater oil production as billions of dollars of cash flow is choked off.

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Shell Shareholders Approve Acquisition of BG Group

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By STANLEY REEDJAN. 27, 2016

LONDON — In one of the first major deals struck as oil prices plummeted, Royal Dutch Shell shareholders on Wednesday approved the acquisition of the BG Group, the Britain-based oil and gas producer, for about $50 billion.

Analysts had expected major oil companies like Shell and ExxonMobil to take advantage of low prices to acquire rivals or smaller companies to strengthen their position, but there have been few big moves so far, perhaps because of the steepness of the drop in oil prices, which have fallen since the summer of 2014 to around $30 a barrel from more than $100 dollar a barrel.

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Oil price falls again as Shell shareholders prepare to vote on mega-merger with BG Group

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The price tumbled as much as 3 per cent during trading yesterday when it emerged Iraq had produced a record high of oil and may even raise output further.

The news comes as the market is already braced for more supply from Iran after sanctions were lifted. 

Tankers have begun to leave Iran’s ports and it agreed its first deal with a European company last week with Greece’s refinery Hellenic Petroleum. 

Some analysts expect Iran to increase production to between 3million and 4million barrels a day. Iraq’s fields produced more than 4.1million barrels a day.

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Does the Shell/BG Group Deal Make Sense With Oil at These Levels?

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On April 8, 2015, Royal Dutch Shell (NYSE:RDS-B) announced the terms of an agreement to buy BG Group for 383 pence in cash (or $5.51 per share) and 0.4454 Shell B Shares. If shareholders of both companies approve the deal when they vote on Jan. 28 and 29, the combined company will become the largest publicly traded LNG producers in the world, with more than double the reserves of ExxonMobil (NYSE:XOM). And it would catapult Shell into becoming the world’s second-largest non-state oil company in the world from a market cap perspective, ahead of Chevron (NYSE:CVX). 

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How Far Will BP plc And Royal Dutch Shell plc Fall If The Oil Price Reaches $20 A Barrel?

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The share prices of these giants could halve… My investment advice for both companies is unequivocal. STEER. WELL. CLEAR.

By Prabhat Sakya – Monday, 25 January, 2016

Isn’t it interesting how, whenever there’s any news, we tend to jump on the negative side rather than the positive? As a commuter, I drive many thousands of miles every year. That’s why it’s great for me that the oil price is falling. And alongside the hundreds of pounds I’m saving on my daily commute, I’ll save a pretty penny on my heating bills over the next few years. Cheap fuel allows the global economy to run more cheaply, and that benefits consumers around the world.

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Oil Rout Prompts Moody’s to Consider Shell, Total for Downgrade

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Screen Shot 2016-01-22 at 12.08.33Moody’s will also review the ratings of two U.S. refining joint ventures linked to Shell, Motiva Enterprises LLC and Deer Park Refining LP.

By Mikael Holter and Rakteem Katakey: Bloomberg.com: 22 JAN 2016

Royal Dutch Shell Plc, Total SA and Statoil ASA, three of Europe’s biggest oil producers, were among more than 100 energy companies whose credit ratings were placed on review for possible downgrade by Moody’s Investors Service.

The reviews come after the rating company cut its oil-price forecasts and should for the most part be completed this quarter, Moody’s said in a statement on Friday. Prices may recover more slowly than companies expect and there is a risk they may fall further, it said.

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Shell reveals that profits have nearly halved but receives major backing for its deal with BG Group

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Screen Shot 2016-01-21 at 11.26.34By LAURA CHESTERS FOR THE DAILY MAIL: 21 JAN 2016

Royal Dutch Shell revealed quarterly profits had nearly halved yesterday but received major backing for its deal with BG Group.

Shell said its fourth-quarter profit will be down by around 40 per cent to between £1.1bn and £1.3bn and its full- year earnings could drop to as low as £7.3bn for 2015 – well below the near £16bn it reported in 2014.

As markets plunged across the globe Shell’s shares plummeted 5.5 per cent or 74.5p to 1294.95p yesterday and BG’s fell nearly 3 per cent or 42.3p to 897p. Despite the chaos and the collapse in the oil price, Shell’s chief executive Ben van Beurden is proceeding with the proposed takeover.

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Shell Expects Sharply Lower Profit Amid Oil Slump

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By STANLEY REEDJAN. 20, 2016

LONDON — Royal Dutch Shell said on Wednesday that it expected profit for the fourth quarter of last year to be sharply lower than in the same period in 2014.

The company issued the preliminary estimates before a much-anticipated vote by Shell shareholders next Wednesday on the proposed acquisition of the BG Group, an oil and gas producer based in England.

Shell estimated that its profit for the quarter, excluding inventory changes and one-time charges, would fall around 50 percent, to between $1.6 billion and $1.9 billion, as lower oil prices cut sharply into revenue. The company posted profit of about $3.3 billion in the fourth quarter of 2014.

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Oil price plunge leads Shell to warn that 2015 earnings will more than halve, but it sees BG Group takeover as a ‘new chapter’

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  • Shell expects full year underlying earnings to drop to between $10.4bn (£7.3bn) and $10.7bn (£7.6bn), a sharp fall on 20’14’s $22.56bn (£15.9bn)
  •  Every $10 change in crude price knocks around $3bln (£2.1bn) off earnings
  • BG says its earnings dropped in 2015 as expected, but added that the results are in line or ahead of forecasts 

By JONATHON HOPKINS FOR THISISMONEY.CO.UK: 20 JAN 2016

Plunging oil prices have led energy giant Royal Dutch Shell to warn that its earnings are expected to more than halve for 2015, sending its shares over 4 per cent lower this morning.

The blue chip group, which is weeks away from completing a £38billion deal to buy rival BG Group, said it expects its full year underlying earnings to drop to between $10.4billion (£7.3billion) and $10.7billion (£7.6billion).

That would be slightly City below expectations and marks a sharp fall on the $22.56billion (£15.9billion) Shell reported for 2014. It will report its full year results on February 4.

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Shell to cut 10,000 jobs in drive to slash costs

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Screen Shot 2015-12-23 at 09.03.45By Sara SjolinPublished: Jan 20, 2016 3:42 a.m. ET

Royal Dutch Shell PLC RDSB, -4.82% RDS.B, -1.28% plans to cut 10,000 jobs in an effort to further reduce costs amid a severe slump in oil prices. The Anglo-Dutch energy company said in its trading update on Wednesday it had slashed operating costs by $4 billion in 2015 and that it expects further reductions of $3 billion in 2016. Shell also said profit fell by as much as 50% in the fourth quarter, sending the shares down 4.2%.

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Shell Fourth-Quarter Profit Plunges as Oil’s Slump Deepens

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Rakteem Katakey: Bloomberg.comJanuary 20, 2016

Royal Dutch Shell Plc said fourth-quarter profit plunged as the rout in crude prices deepened. 

The company sees profit adjusted for one-time items and inventory changes of $1.6 billion to $1.9 billion, The Hague-based Shell said Wednesday in a preliminary earnings statement. That compares with the $1.8 billion average estimate of nine analysts surveyed by Bloomberg, and profit of $3.3 billion a year earlier.

Shell, which is buying BG Group Plc in the industry’s largest deal in a decade, has cut jobs and reduced spending as Chief Executive Officer Ben Van Beurden prepares for a prolonged downturn. Crude’s slump below $30 a barrel has driven down Shell’s market value to the lowest in almost seven years and prompted concern it may be overpaying for BG’s production and cash flow.

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Shell warns of 50% cut in profits amid plunging oil price

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Terry MacalisterWednesday 20 January 2016 08.11 GMT

The dismal figures ramp up the pressure on Shell’s chief executive, Ben van Beurden, who is trying to justify the £35bn takeover of rival BG which must be agreed by more than 50% of Shell shareholders next week.

FULL ARTICLE

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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Did Shell Take On Too Much Risk In This Oil Price Environment?

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The $50 billion acquisition is a risky prospect indeed, even though Shell is adamant that after dumping assets and jobs, the acquisition will actually turn a profit at $50 per barrel of crude. According to Shell, this is the worst-case, short-term scenario.

Despite plenty of sentiments to the contrary, Shell is fervently lobbying for this deal to go through. Last week, an influential shareholder advisory group—Institutional Shareholder Services—even recommended that investors embrace the BG takeover, according to the Wall Street Journal. They cited “credible evidence” that Shell was paying a fair price, even in the current oil price slump.

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Will Royal Dutch Shell Eliminate Its Dividend This Year?

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Screen Shot 2015-11-20 at 08.55.47Extracts from an article by Lior Cohen: JAN 14, 2016

Shell’s stock shed 10% off its value over the last month, as the price of oil dwindled.

Following this fall, the dividend yield is currently at 9.4% – a historic level.

Some investors think that because the company paid and raised its dividend since WW2, it means it won’t deviate at this stage. But let’s not forget that times are changing. And if Shell were to face say a Gulf of Mexico oil spill as BP (NYSE:BP) encountered back in 2010, you can bet the dividend will be eliminated in a heartbeat – especially in times of low oil prices. But even without a major oil spill, the current oil price environment stresses Shell’s cash reserves.

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Oil prices will get worse before they get better: Analysts

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By Tom DiChristopher: 13 Jan 2016

After U.S. crude prices broke below $30 per barrel for the first time in 15 years, the market is asking how low oil futures can go? Most analyses see it rebounding in the back half of 2016, but crude faces significant headwinds in the coming months, experts told CNBC.

On Monday, Morgan Stanley joined Goldman Sachs in saying oil prices could dip to $20, and a number of major banks cut their crude cost outlook this week. Standard Chartered even raised the specter of $10 oil.

Oil as low as $20 — and perhaps even lower — is indeed possible, said Matt Smith, ClipperData’s director of commodity research.

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Shell upbeat on BG buyout even as oil price falls as shareholder advisory group Glass Lewis is said to be in favour of the deal

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But some investors are concerned over the plunging oil price and late last week Standard Life Investments said it would be voting against the deal.

By JON REES, FINANCIAL MAIL ON SUNDAY: 10 JAN 2016

Shell’s £36billion offer for rival BG Group has received a boost after shareholder advisory group Glass Lewis is understood to have come out in favour ahead of the investors’ vote later this month.

Glass Lewis is the leading adviser for US shareholders and nearly a third of Shell’s investors and a quarter of BG’s are US-based. The deal has also won the backing of the other leading shareholder advisory group ISS last week. 

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Can Royal Dutch Shell Plc Withstand Another Year Of Cheap Oil?

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By Harvey Jones | Fool.co.uk: 7 JAN 2016

It’s been a shocking start to the year for global stock markets in general and the oil price in particular. A barrel of Brent crude has fallen to a 12-year low of $34 and there’s no sign of it bottoming out. That’s astonishing as you might have expected the opposite to happen, given soaring tensions between Saudi Arabia and Iran, the world’s largest and fourth-biggest oil producers, respectively.

Glut of black gold

Geopolitical troubles could easily trigger an oil shock that could send the price spiralling upwards as fast as it has fallen. Yet markets can’t bring themselves to think about that prospect with the world swimming in an absolute glut of the black stuff.

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ALEX BRUMMER: Oil pressure surges at Shell as it determinedly presses ahead with its bid for BG Group

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By ALEX BRUMMER FOR THE DAILY MAIL: 7 JAN 2016

The price of Brent crude oil continues its relentless slide on global markets and is now at its lowest level for 12-years, and there is no reason at all to think that it has hit rock bottom.

This has serious implications for Shell as it determinedly presses ahead with its bid for BG Group, formerly the exploration arm of the ‘old’ British Gas.

With each fall in the oil price the value of Shell shares, down 2 per cent in latest trading, takes a hit and the shape of the offer for BG changes. When Shell set out to buy BG in April the oil price was $67-a-barrel and it is now near enough half that.

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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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Shell’s flimsy payout promise: Oil prices would have to bounce back to about $60-a-barrel for BG merger to make any economic sense, says ALEX BRUMMER

Screen Shot 2015-12-30 at 09.11.22If one were Shell and BG directors clutching at straws, seeking to force through a £47billion merger forged in the midst of a dramatic correction in oil prices, you might breathe a sigh of relief at a 2 per cent rebound in Brent crude to $37 a barrel in latest trading.

The very idea, however, that the proponents of one of the UK’s biggest ever mergers is relying on the hope and the prayer of a recovery in crude prices to about $60 to make any economic sense of the combination is illustration of the flimsiness of this deal. 

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Is BP plc Set To Outperform Royal Dutch Shell Plc In 2016?

Screen Shot 2015-12-30 at 09.00.45By Rupert Hargreaves – Tuesday, 29 December, 2015

If you’re looking to invest in the oil sector next year, Royal Dutch Shell (LSE: RDSB) and BP (LSE: BP) should be on your hit list.

The two oil giants have many advantages over their smaller peers, such as strong balance sheets, integrated operations and some of the lowest production costs in the business. Indeed, it doesn’t make sense to buy into the smaller producers such as Tullow Oil, Premier or Enquest when shares in Shell and BP are both on offer. 

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Oil Prices Slump to 11-Year Lows in Asia and Europe

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By STANLEY REEDDEC. 21, 2015

LONDON — Oil prices hit 11-year lows in Asia and Europe on Monday, as a glut of crude on world markets and the recent global climate accord continue to depress fossil-fuel prices.

Brent crude oil, the international benchmark, settled at $36.51 a barrel on Monday in Europe.

Analysts say there is little to restrain continued price declines in the near term. Prices are down about 15 percent so far in December, after an OPEC meeting failed to produce measures to restrain record-high production. That meeting was quickly followed by the United Nations climate accord in Paris, which aims to reduce the world’s reliance on oil and other carbon-emitting fuels.

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11 December 2015

The oil price has fallen to a new seven-year low after the International Energy Agency (IEA) forecast a slowdown in growth in demand for oil.

The price of Brent crude oil fell below $39 a barrel at one point, its lowest since December 2008.

The IEA said demand in the current quarter was growing by 1.3 million barrels a day, down from 2.2 million barrels in the previous quarter.

The IEA predicts that will slip back to 1.2 million barrels a day next year.

The price of Brent crude fell to $38.90 a barrel at one point, before recovering slightly to $39.13 – still down 60 cents in the trading session. US crude oil also fell, down 50 cents to $36.12 a barrel.

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Royal Dutch Shell’s Management Wants You to Know These 5 Key Things

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Royal Dutch Shell’s Management Wants You to Know These 5 Key Things

Screen Shot 2015-11-20 at 08.55.47Last quarter was a pretty rough one for Royal Dutch Shell (NYSE:RDS-A) (NYSE:RDS-B). The company was forced to take more than $7.9 billion in charges to the income statement to write down some abandoned development projects, and its oil and gas production in the Americas continues to be a bit of a headache. 

Management was well aware of how these results looked, and so on its most recent conference call its executives acknowledged these weaknesses but also had some things to say that any investor in Shell should be aware of. Here are five quotes from the most recent conference call that provide some juicy tidbits into how to view this company over the long term.

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Brent Under $40: Bad News for Big Oil

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By SARAH KENTDec 8, 2015

Shell has slashed $11 billion from its capital spending and operating costs this year. The company said in July that it would cut 6,500 jobs and in October abandoned a major oil-sands project in Western Canada.

The company posted a loss of $6.1 billion in the third quarter, after taking a $2 billion charge for scrapping the project and recording impairment charges of nearly $4 billion as a result of the weaker oil and gas price outlook.

They may have to cut deeper if oil prices stay at or below $40 a barrel…

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OPEC Won’t Cut Drilling, and Prices Plunge 5%

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By CLIFFORD KRAUSSA version of this article appears in print on December 8, 2015, on page B1 of the New York edition

HOUSTON — Crude oil prices slid a further 5 percent on Monday to fall to their lowest levels since the 2009 global recession, pummeled by the fading chance that Saudi Arabia would cut production to halt the commodity’s yearlong slide.

In only 16 months global oil prices have collapsed from over $110 a barrel to less than half that, and the oil industry in the United States and around the world is reeling from its worst crisis since the late 1990s. On Monday, the American benchmark broke the $38-a-barrel mark, a price that makes drilling and completing wells a losing proposition in almost all oil fields around the country.

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Shell Has Underperformed, But It Could Be The Only Oil Major That Emerges Bigger From The Downturn

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Screen Shot 2015-11-20 at 08.55.47…the company’s profits plummeted 70% from last year to $1.77 billion…

Sarfaraz A. Khan: Sunday, Dec 6, 2015

Summary

  • The oil major Royal Dutch Shell is closing in on its biggest-ever merger with the UK based oil and gas producer BG Group.
  • Shell has been the worst performing stock in its peer group and now offers an above average yield of 7.8%.
  • But Shell is generating enough cash from operations and asset sales to cover its spending.
  • More importantly, Shell could be the only oil major that emerges even bigger from the downturn.

The oil major Royal Dutch Shell (NYSE:RDS.A) (NYSE:RDS.B) is closing in on its biggest ever merger with the UK based oil and gas producer BG Group (OTCQX:BRGYY). On Wednesday, the Anglo-Dutch oil producer revealed that it has received a green signal from Australia’s Foreign Investment Review Board following an approval from the country’s anti-trust regulator received last month. The BG Group is one of the major players in Australia’s rising LNG sector where the company has invested more than $20 billion on developing the Queensland Curtis LNG plant.

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Oil majors BP and Royal Dutch Shell spring a leak after Middle East oil cartel Opec fails to slash production

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By PHILIP WALLER FOR THE DAILY MAIL

PUBLISHED: 21:50, 4 December 2015

Oil majors sprang a leak but airlines flew higher after Middle East oil cartel Opec failed to slash production.

Shares in BP fell 8.85p to 359.7p and Royal Dutch Shell surrendered 29.5p to 1599.5p as the oil-producing club opted to keep pumping near-record volumes of crude.

The price of a barrel of Brent crude was 0.8 per cent down at $43.49 and the cost of US light crude dropped nearly 2 per cent to around $40 amid fears of a continued supply glut.

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For Shell and BG, All Roads Lead to Lower Spending

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Screen Shot 2015-11-29 at 20.02.58By HELEN THOMAS: Nov. 29, 2015 2:00 p.m. ET

Royal Dutch Shell can’t forcibly renegotiate the deal it struck in April to buy oil and gas producer BG: The U.K. Takeover Panel wouldn’t allow it. And amid griping over the price, the oil major argues the $58 billion cash-and-shares transaction should help its cash flow regardless. That may be so. It doesn’t, however, lessen the need for Shell to do more in cutting costs and spending.

FULL ARTICLE

Shell Forced to Scale Back Ambitions

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Screen Shot 2015-11-20 at 08.55.47By James StaffordThu, 26 November 2015

As with most oil companies, 2015 has been a rough year for Royal Dutch Shell. The Anglo-Dutch company reported a third quarter loss of $6 billion, which included $7.9 billion in impairment charges.

During its third quarter earnings call, Shell’s CEO Ben van Beurden summed up the company’s strategy, emphasizing restraint. “Grow to simplify” is how he put it. What that means in practice is scrapping the Arctic campaign; pulling out of the expensive Carmon Creek oil sands project in Canada; shedding assets in the less desirable parts of North American shale; selling assets elsewhere around the world, including Nigeria; and focusing on its merger with BG, which is a big bet on LNG.

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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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