Posts under ‘Oil Company Profits’

Sky Sunrise Interview Thursday 2 February 2012

Eamonn Holmes interviewing Royal Dutch Shell CEO Peter Voser

Eamonn Holmes

Breaking news coming in from the City… Shell the petroleum giant reporting profits of more than £18 billion pounds.. 54 per cent up on last year…

Lets go to their Chief Executive Peter Voser, he’s there in Central London, Congratulations very good news for you but most people Mr Voser will be saying will we see any of these benefits on the forecourt?

Peter Voser

Yes, thank you very much, yes I think Shell had a good year and we are pleased with our progress on the many  projects in which we are investing…

On the forecourts I think two thirds of the price as you know are really going to the government… the other one third is clearly very competitively priced as you may have seen Shell made a loss in the oil products marketing business in the fourth quarter… it was a very tough environment but still we are offering very competitive prices to the customers and at the same time we are investing 30 billion dollars every year in order to achieve… lets say growth in energy so that we can satisfy the demand so that the price can actually be kept in a certain band…

Holmes

So that’s a no for us, you’ll get all the benefits… we’ll get hardly any then as a result of that..

How are you able to do this when your production went down by a few per cent last year… where are the growth markets now? What is the good news?

Voser

I think the good news is clearly that we are going up in terms of production because I think so you have all these external effects that you cannot take… so… the fourth quarter was a very warm quarter, hence our production was not as strong as normally… but we are now planning for 2012 to increase our production out of our flagship projects we are coming on stream and therefore we will generate an increase in cash flow which we are forecasting to be 50 per cent over the next four years and over the next six seven years we will also produce 25 per cent more production.. will reach four million barrels… so I think that’s where the growth is going into from our side and its mainly emerging markets…

Holmes

Mainly the emerging markets you say but is it true that there will be good news for the North Sea because there’s a lot of talk that you will be able to get more production that you’ll be able to extend the life of some of the North Sea oil fields?

Voser

That’s absolutely correct… We took major investment decisions in 2011 in the North Sea in projects like Clair like Schiehallion where we are actually going to invest huge sums of money to actually produce more oil out of the North Sea and I think this will clearly give a boost to the revenue generation of the UK of the government and therefore will also contribute to the economy in the UK over the next few years… there is a lot of job generation behind that within the UK… we are very proud to be part of that.

Holmes

Well that’s good to hear…

When big companies like your own Mr Voser come forward with these profits… and £18 billion pounds we’ve talking about… there’s always this debate these days about executive pay, and shareholder value and your shareholders over the past year have had a bit of disquiet about what goes on in terms of bonuses and executive pay.. what have you done to be able to appease them in any way?

Voser

I think if you look back over the last 3 years our share price has gone up by 70 per cent…

SCREEN SUDDENLY GOES BLACK, CONNECTION LOST

Holmes

O… obviously we ran out of something in the tank there.. it probably wasn’t Shell product… but there we go… that’s Peter Voser and he’s a very happy man because profits up 54 per cent year on year for Shell £18 billion pounds and we were just talking about shareholder revolts and somebody has revolted and pulled out the plug there…

* Fourth quarter results disappoint

* Anaemic dividend rise

* Higher investments seen but returns weaken

* Shares drop

By Tom Bergin

LONDON, Feb 2 (Reuters) – Royal Dutch Shell said it was targeting aggressive growth in the coming years, with the start-up of big new projects and higher investments set to drive a 50 percent rise in cashflow and a 25 percent rise in oil and gas production.

However, weaker-than-expected results for the fourth quarter, partly due to dismal industry-wide refining margins, and an anaemic dividend hike, raised the question of whether Shell was simply running faster to stand still, with investments offering ever-dwindling returns.

Shell’s London-listed A shares traded down 2.2 percent at 0826 GMT, lagging a 0.8 percent drop in the STOXX Europe 600 Oil and Gas index.

Hague-based Shell said it was eyeing a return to strong production growth in the coming years, after nearly a decade. Apart from a 5 percent rise in 2010, the group’s production has fallen every year since 2002.

“Oil & gas production should average some 4 million boe/d (barrels of oil equivalent per day) in 2017-18,” the company said in a statement.

Production averaged 3.215 million boe/d in 2011, a 3 percent drop on 2010.

This growth will be generated by higher capital investment expenditure, which will rise to $32-$33 billion this year from $31.5 billion last year, Shell said.

Analysts had previously predicted that capex would fall, as Shell completed the big new projects such as the pearl gas-to-liquids plant in Qatar, which will push output higher.

The high capital being invested is one reason that Shell’s return on capital employed failed to sparkle, at 15.9 percent, compared to levels above 20 percent a few years back when oil prices were considerably lower.

Similarly, in spite of a record average Brent crude price of $111/barrel in 2011, the full year current cost of supply (CCS) net income of $28.6 billion still lagged the earnings high Shell reported in 2008, of $31.4 billion.

FOURTH QUARTER DISAPPOINTS

Shell said its fourth quarter CCS net income was $6.46 billion, helped by one-off gains from the sale of assets.

Excluding one-offs, the result rose 18 percent to $4.85 billion, shy of an average forecast of $5.17 billion from a Reuters poll of nine analysts.

The miss is despite the fact analysts had recently cut back their forecasts in the light of weak trading statements from Shell’s rivals.

CCS earnings strip out unrealised gains or losses related to changes in the value of inventories, and as such are comparable with net income under U.S. accounting rules.

The company also announced a weaker rise in its dividend than some analysts expected, adding just 1 cent to its first quarter dividend for 2012, to $0.43 per share.

SOURCE ARTICLE

By Eduard Gismatullin – Feb 2, 2012 8:02 AM GMT

Royal Dutch Shell Plc (RDSA), Europe’s biggest oil company, expects to raise its dividend this year for the first time since 2009 as new projects generate more cash.

Shell plans net capital investment of $30 billion, with cashflow from operations in 2012-2015 expected to be as much as 50 percent higher than in the 2008 to 2011 period.

Chief Executive Officer Peter Voser said growth will be driven by more than 60 new projects, unlocking potential resources of more than 20 billion barrels of oil equivalent. That’s on top of 14 projects started in 2009-11, including Qatar’s Pearl gas-to-liquids venture.

“Our improving financial position creates an opportunity to increase both our dividends and investment levels,” Voser said today in a statement.

Net income fell to $6.5 billion in the fourth quarter from $6.79 billion a year earlier, The Hague-based Shell said. Excluding one-time items and inventory changes, profit missed analyst estimates.

Shell is the first of Europe’s biggest oil companies to report earnings. It will be followed by BP Plc on Feb. 7 and Total SA on Feb. 10. Exxon Mobil Corp., the world’s largest energy company by market value, reported fourth-quarter sales that fell short of analysts’ estimates earlier this week.

Shell posted adjusted earnings of $4.8 billion, compared with the $5.2 billion median estimate of 15 analysts surveyed by Bloomberg.

‘Substantial Undershoot’

“The overall result represents a substantial undershoot against a consensus which just three weeks ago was above $7 billion,” said Stuart Joyner, an analyst at Investec Bank Plc.

U.K. front-month natural gas prices are down about 20 percent since reaching a 2011 high of 67.80 pence per therm on Nov. 7. Milder weather in Europe and maintenance curbed Shell’s production by about 100,000 barrels of oil equivalent in the quarter, according to Sanford C. Bernstein & Co.

Shell will increase production to about 4 million barrels of oil equivalent a day in 2017-2018. Last March, it said daily output would rise to 3.5 million barrels this year and 3.7 million barrels by 2014.

Output fell 5.5 percent to 3.305 million barrels a day in the fourth quarter from the year-earlier period.

Profit was also curbed by maintenance at rigs in the Gulf of Mexico and the North Sea. Shell shut the Bonga field in Nigeria after an offshore oil spill, the nation’s worst in more than a decade. A fire disrupted shipments from Shell’s Pulau Bukom plant in Singapore, the company’s biggest.

Shell made a loss of $278 million from its refining and marketing operations, compared with a profit of $482 million a year earlier. Crude-processing fell 17 percent as sales dropped.

Refining margins from processing oil into fuels such as gasoline and diesel on the U.S. Gulf coast fell 22 percent to $7.16 a barrel in the fourth quarter from a year earlier, according to BP Plc data.

Of the 31 analysts that cover Shell, 21 recommend buying the shares, nine have ‘hold’ ratings, and one advises investors to sell the stock.

Shell plans to increase the dividend by 2.4 percent to 43 cents in the first quarter from 42 cents announced in the fourth quarter.

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

SOURCE ARTICLE

Feb. 2, 2012, 2:39 a.m. EST

By Alexis Flynn

LONDON (MarketWatch) — Royal Dutch Shell PLC Thursday posted an 18% rise in adjusted profit for the fourth quarter, but Europe’s largest company by market capitalization still missed analyst expectations, as poor refining margins and lower natural gas demand crimped some of the benefits of higher crude prices.

“Our fourth quarter results were impacted by a sharp downturn in industry refining margins and North American natural gas prices,” said Chief Executive Peter Voser, adding that “the global economy and energy markets are likely to see continued high volatility.”

The Anglo-Dutch energy company said the clean current cost of supplies, a keenly-watched figure that strips out gains or losses from inventories and other non-operating items, was $4.85 billion in the three months ended Dec. 31, compared with $4.11 billion in the fourth quarter of 2010. This was below expectations of $5.16 billion in a Dow Jones Newswires poll of fifteen analysts.

Total oil and gas production was 3.305 million barrels of oil equivalent per day, a decline of 5% on the year as asset sales and the temporary shutdown of one of its biggest Nigerian fields affected output. Analysts were expecting production to decline 6.4%.

Net profit for the quarter totaled $6.50 billion, down 4% from $6.79 billion a year ago.

Group revenues were $119.13 billion, compared with $105.53 billion in the fourth quarter of 2010.

Diluted earnings per share were 1.04 compared with $1.10 the previous year.

Shell B shares closed at 2,326 pence Wednesday. The stock rose 11% in 2011 despite volatile equity markets, buoyed by continued high oil prices and its improved financial performance.

SOURCE ARTICLE

Shell may even go as far as paying a special dividend or buying back shares to maximize shareholder value, according to analysts at Citigroup Inc.

Sunday Express

Sunday 29 Jan 2012

By Tracey Boles

ROYAL Dutch Shell is set to gush full-year profits of $27.3 billion (£17.4 billion) for 2011, a 175 per cent increase in a year.

The expected surge in earnings comes despite fourth-quarter profits hurt by lower demand because of the warm winter weather.

The results, buoyed by the high cost of crude oil last year, represent a spectacular return to form for the oil giant which reported disappointing full-year profits for 2010 of $9.8 billion (£6.3 billion).

However, it is still below its 2009 record performance of $31.4 billion ($20 billion).

Analysts predict that profits for the fourth quarter at the Anglo-Dutch company will be about $5.1 billion (£3.3 billion), which compares with $7.25 billion in the third quarter.

This represents a drop of about 25 per cent which is attributed to the mild winter and an extensive maintenance programme.

But it is a strong recovery from the previous year, when it suffered a 75 per cent crash in fourth-quarter profits to $1.18 billion (£750 million).

Analysts at Collins Stewart said: “Shell will report its Q4 2011 results on February 2. We expect a combination of circumstances to lead to weak figures, as was the case at fourth-quarter 2010.”

“In our view the market is still underestimating the scale of growth in its cash flow, from an underlying $32 billion (£31.8 billion) in 2010 to about $50 billion (£20 billion) by 2013 on our estimates.”

The experts also expect guidance this week on the 2012 dividend, with growth predicted.

Published on Sunday 29 January 2012 00:00

HIGHER annual and quarterly profits from oil heavyweight Royal Dutch Shell are this week expected to ignite the fury of hard-pressed drivers who continue to face near record prices at the petrol pump.

But the figures are likely to spell good news for investors as analysts raise the prospect that Shell, which boasts one of the largest dividends on the FTSE, may recommend an increase in the pay-out.

Although both full-year and quarterly numbers will be released, the City will focus on profits for the last three months of 2011, which are expected to be about 20 per cent higher compared to the same period in 2010.

However, analysts forecast they will be roughly 27 per cent below the third quarter as oil prices remained relatively flat over the final three months of 2011. That followed steep price gains earlier in the year driven by the political turmoil in the Middle East and North Africa.

The City spotlight on Thursday will also be on whether Shell confirms progress in getting American regulatory permits to explore an eventual potential oil bonanza off the Alaskan coast.

Jason Kenney, oil analyst with Santander, said: “Shell is a cash machine, but not really a growth entity. The ambitions [for Alaska] are still there, however.

“It [Alaska] will be a big exploration opportunity when it gets the full go‑ahead, with identified targets [for oil exploration].”

Analysts at broker Charles Stanley believe Shell “should have room to increase the [Q4] dividend”. It cites cash flow of $45 billion (£28.6bn) generated in 2011 compared to capital spending of $27bn and dividends of $10bn in the first three quarters. The broker forecasts rival BP, which reports the following week, will peg its fourth-quarter dividend at seven cents.

Santander forecasts an underlying profit at Shell, on a current cost of supplies basis, of $4.9bn, up from $4.1bn in the same quarter of 2010.

For the full year, the bank’s broking arm expects profits will have gone up to $24.7bn from $18.6bn in the previous 12 months.

While Shell’s exploration and production division is expected to have boosted profits to more than $5bn in the final three months of its financial year, up 52 per cent, it is thought the downstream – refining and marketing – arm may have fallen to a loss of between $180m and $210m.

Refining and petrochemical margins have been under pressure throughout the whole energy industry, partly on lower chemical volumes and the weakness of the euro.

BP, which reports on 7 February, is also seen as having boosted earnings as it continues to put the Gulf of Mexico oil disaster behind it.

Charles Stanley forecasts that BP’s fourth-quarter profits will have jumped 22 per cent to $2.2bn.

SOURCE ARTICLE

By Emma Rowley

Separately, US rival ExxonMobil said quarterly earnings rose 41pc to $10.3bn as the high oil price offset falling production.

Published in the Business Section of the Telegraph on Friday 28 October 2011

MARK WILLIAMSON

28 Oct 2011

ROYAL Dutch Shell said it would curb investment in Europe where it expects the economy to stagnate, but made clear it would still spend in the North Sea.

Announcing bumper profits driven by high oil prices, the oil and gas giant said it will shift a growing share of its investment to places like Qatar, where the launch of huge projects will underpin growth for years.

Noting that Shell only devotes 15% of its investment to Europe, chief financial officer Simon Henry said the continent’s share will shrink amid concerns about the fallout from the debt crisis.

The day after European ministers finally agreed a plan to try to stabilise the eurozone, Mr Henry indicated Shell executives have been unimpressed by the response to the problems.

He told reporters: “Europe’s macroeconomic position can only recover and the sovereign debt crisis can only be addressed through underlying economic growth. We do not see the EU creating the conditions for that – in fact quite the opposite.

“Most moves by the [European] Commission one way or another tend to almost directly or indirectly reduce the competitiveness of European industry.”

Mr Henry said Shell had identified plenty of global opportunities to put its money to good use, including developing 20 major projects in countries such as Canada and Australia that will underpin growth for years. However, Shell still sees scope to invest in the North Sea.

Mr Henry noted Shell recently confirmed it will invest in the £4.5 billion BP-led Clair Ridge project west of Shetland, among the 20 growth projects he cited.

Earlier this year Shell approved plans for the £3bn redevelopment of the Schiehallion and Loyal fields, also west of Shetland.

In May, Shell’s chief executive Peter Voser told The Herald that it could remain in the North Sea for decades.

However, the firm told the Government that tax hikes in the Budget could jeopardise investment in smaller projects.

Shell said it will continue to dispose of non-core assets, although at a slower pace than in the past two years. Shell has already raised $6.2bn (£3.9bn) against a target of $5bn.

Richard Griffith, an oil and gas analyst at Evolution Securities, said Shell’s third quarter results showed the company is in a “sweet spot”.

Stripping out the effect of changes in inventories, the company doubled third quarter profits to $7.2bn, from $3.5bn in the same period last year.

Shell benefited from a 48% rise in oil prices – partly caused by unrest in the Middle East and Africa. Production increased by 2% annually, excluding asset sales, to 3.01 million barrels oil equivalent daily.

Upstream earnings increased 58% annually, to $5.4bn. Profits in the downstream business, which includes forecourt sales increased by 25% to $1.8bn.

Asked what respite Shell would provide to hard-pressed motorists, Mr Henry said: “We do a good job in getting the lowest cost fuel to customers. The Government is probably the first people you should call.”

Mr Henry said the Government takes two-thirds of the price of a litre, adding: “It is a volume business on which we make a very small margin.”

Mr Henry said Shell could not use the profits from its upstream business to subsidise the downstream.

The company announced an unchanged third quarter dividend of $0.42 per ordinary share.

Shares in Royal Dutch Shell closed up 27p at £22.80.

SOURCE ARTICLE