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Why Royal Dutch Shell plc’s share price could collapse 60%!

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…with the fossil fuel giant battling a gigantic $70bn debt pile as well as a sickly revenues outlook, I believe asset sales alone may not be enough to keep the balance sheet afloat, and that dividend cuts could still be on the cards.

By Royston Wild – Monday, 27 June, 2016

Despite the volatility smashing financial markets on Friday — Britain’s decision to exit the European Union caused the FTSE 100 to shunt 3.2% lower — oil sector shares proved to be extraordinarily robust.

Indeed, fossil fuel giant Shell (LSE: RDSB) saw its share price slip just 0.3% on the day. This is despite wide risk-aversion pushing Brent back below $50 per barrel, the crude benchmark shedding 5% of its value to rest at $48.50.

Steady… for the moment

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Police Confirm Attack On Shell Facility In Nigeria

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Screen Shot 2016-06-07 at 23.34.38By Lincoln Brown – Jun 24, 2016

Police in the area of Imo in Nigeria have confirmed that there has been an attack on a Shell Petroleum Development Company (SPDC) facility there. The attack, which was in the Ohaji/Egbema Local Government area took place early Thursday.

One source told the News Agency of Nigeria that the attack came at 5:30 in the morning and reported an explosion that created a great deal of flame. That source could not confirm if anyone was killed in the incident.

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Oil Prices and the Brexit: What Just Happened

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IMAGE SOURCE: GETTY IMAGES.

By Matthew Dilallo: 24 June 2016

What: Crude prices tumbled on Friday after Britain’s stunning decision to leave the European Union. By mid-afternoon, oil was down 4.5% and back below $50 a barrel. The sell-off washed over into oil stocks, with British giants BP (NYSE:BP) and Royal Dutch Shell (NYSE:RDS-A)(NYSE:RDS-B) both following crude downward by more than 5% as of 12:30 p.m. EDT.

Those moves, however, were tame compared to the sell-offs of other European oil stocks, with Statoil (NYSE:STO) and Total (NYSE:TOT) down nearly 6% and 9%, respectively. Even large independent U.S. oil companies were taking it on the chin, with ConocoPhillips (NYSE:COP) just one among the many oil stocks sliding in parallel with the price of crude.

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Goldman Sachs Says Oil Isn’t Recovering

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By James Burgess – Jun 15, 2016

Goldman Sachs has rejected analysts’ opinions that the global oil market is recovering, noting that while it expects a “modest” deficit in the coming months based on the slight rebound in oil prices, the market will again be in a state of surplus by early next year.

It may seem as if oil is recovering on the back of supply disruptions that have helped to chip away at the global glut and push prices close to $50, but Goldman says that in the best-case scenario this isn’t a rebound—it’s just the first signs of one.

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Brexit and Brent

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Screen Shot 2016-05-30 at 15.37.19By Ed Crooks: June 24, 2016

In the market maelstrom that followed the UK’s referendum vote to leave the EU, the oil price took some collateral damage, with Brent crude dropping below $48 for the first time in a week. As the country sat up to watch the results come in, National Grid had to cope with the largest ever spike in night-time electricity demand.

The longer-term implications of Brexit for energy in the UK and Europe, like most other consequences of the decision, are highly uncertain. Politico and others sketched out some of the main issues, with news outlets taking a range of differing perspectives. Norton Rose Fulbright published an excellent primer, focusing on some of the key legal questions. BusinessGreen rounded up reaction from environmental campaigners and renewable energy businesses. Christiana Figueres, executive secretary of the UN Framework Convention on Climate Change, suggested before the result was known that a vote for Brexit would mean the Paris agreement on tackling global warming would “require recalibration”.

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The sustainability of Royal Dutch Shell’s dividend

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It is not quite true to say that the stock market is relying on the Royal Dutch Shell dividend, but since the oil company accounts for over a tenth of the total dividends paid by UK companies, a cut would be quite a shock. The shock would be terminal for Ben van Beurden, since the Shell CEO would have broken the promise made during the takeover of BG Group.

FULL FT ARTICLE

Royal Dutch Shell Has Served Notice – The Deepwater Drillers Are In Big Trouble

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June 23, 2016

Screen Shot 2016-05-21 at 10.18.28Summary

  • Eighteen months ago Shell was considering exiting shale plays and focusing on its deepwater and LNG opportunities.
  • Shell’s recent analyst day presentations revealed a company that is shifting its long term focus towards shale.
  • We think that going forward the offshore drilling rig companies have major long term challenges and investors need to be aware that pre-crash cash flows aren’t coming back.

For the small sliver of global oil production that U.S shale oil actually represents it certainly has been a disruptive force.

Total shale production (there is no significant amount outside of the United States) is currently somewhere around 4.5 million barrels per day.

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That is not much more than four percent of total current production which checks in at over 96 million barrels per day.

After having a look at Shell’s (NYSE:RDS.A) 2016 capital markets day presentation we think shale oil is going to become even more disruptive going forward for a select group of companies.

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Shell’s Ambitious Plan To Topple Exxon

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By Rakesh Upadhyay – Jun 22, 2016, 5:17 PM CDT

Ben Van Beurden, Chief Executive Officer of Royal Dutch Shell has laid out an ambitious plan to overtake ExxonMobil as the number one oil company in the world.

Prior to the 1990s, Shell was the leader in total shareholder returns, however, its rivals went on a deal-making spree to gain the lead, while Shell shied away from making any acquisitions. Now, Mr. Beurden believes that Shell will be able to regain its lost glory post the acquisition of the BG group.

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Shell works to simplify organization to compete with independents

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By Mella McEwen [email protected]: 22 June 2016

Too big. Too rigid. Not nimble enough.

Those are reasons why integrated oil companies could have a difficult time competing with independents in the unconventional shale plays that have led to a resurgence in the nation’s oil and gas industry.

Royal Dutch Shell, however, disagrees with that reasoning and this week held an event to reaffirm its commitment to the shales business, including its holdings in the Permian Basin.

Shell officials discussed how its recent $70 billion acquisition of the BG Group has impacted its outlook. The event was a mixer at Shell’s Drilling Automation & Remote Technology (DART) Center located on its Houston campus and was webcast and available by telephone.

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Oil Explorers Embrace the Sharing Economy to Drill Cheaper Wells

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Screen Shot 2016-06-07 at 23.34.38By Rakteem KatakeyJune 22, 2016 — 12:01 AM BST

The biggest oil-industry downturn in a generation has companies collaborating in ways they never thought possible.

In this global effort, one of the world’s most expensive oil regions intends to lead the way. Last month companies operating in the North Sea started pooling spare parts and tools, and they are even sharing plans on how to drill wells so they can work faster and cheaper, said Paul Goodfellow, Royal Dutch Shell Plc’s vice president for the U.K. and Ireland.

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This is a big change from oil’s boom, when costs weren’t such an issue as long as $100-a-barrel crude kept flowing. As companies focus on adapting to prices closer to $50 by making their spending less wasteful, they also aim to boost profitability for years to come by keeping costs low as markets recover.

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Shell Sees Strong Potential for Permian Basin Assets

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Bruce Palfreyman, general manager of Shell’s Permian asset group, said the company believes it has the best position in the Delaware, part of the Permian Basin in West Texas, in terms of size and rock quality. The company holds 300,000 net acres in the Delaware through its joint venture with Anadarko Petroleum Corp., with more than 5,000 future well locations on a risk basis.

Shell acquired the acreage in 2012 from Chesapeake Energy, and has spent the past three years maturing and de-risking the acreage, Palfreyman told reporters during a media event Monday in Houston to outline Shell’s strategy on its unconventional oil and gas business. The company has pursued a high-grade strategy for its Permian acreage, selling off peripheral acreage. Shell’s position in the Delaware contains 2 billion barrels of oil.

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Russia’s Gazprom eyes asset swap deals with Shell, OMV by year-end

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ST PETERSBURG, RUSSIA | BY DENIS PINCHUK AND DMITRY ZHDANNIKOVMon Jun 20, 2016 8:29am EDT

Russia’s state-controlled gas giant Gazprom (GAZP.MM) could gain control over some of the assets that Shell (RDSa.L) acquired earlier this year from BG group, a senior Gazprom executive said in an interview.

Gazprom’s Deputy Chief Executive Alexander Medvedev said the BG holdings could be included in an asset swap deal between Gazprom and Shell that was announced last year. He did not say what the BG holdings were or where they were located.

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Report: Shell’s Martinez refinery could be sold

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By Sam Richards , [email protected]

Screen Shot 2016-05-21 at 10.18.28MARTINEZ — Two published reports Friday say the Shell Martinez Refinery is up for sale, prompted by what are expected to be crude oil prices rising faster than gas prices at the pump.

The reports, one of them from the international news agency Reuters, say the Netherlands-based global energy company Royal Dutch Shell is looking to shed some of its smaller, less profitable refineries ahead of the anticipated price hike for crude.

The Reuters story said Shell and at least three other major oil companies, including San Ramon-based Chevron, have seen dropping profit margins from their refining operations since a peak in 2015 and want to shed some lower-profit operations before crude oil prices rise much further from recent low levels.

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Short term strength

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By Ed Crooks: June 17, 2016

This week has brought evidence of contrasting short-term and long-term trends in the oil market. In the short term, demand and supply are both turning out to be stronger than many had expected. The IEA revised up its forecast for oil demand growth this year in its monthly oil market report, but added that rising production would mean global oversupply could persist into 2017.

There are early indications of an upturn in activity in the US shale industry, still faint so far, but ominous for anyone relying on a sharp rebound in crude. And Iran said its oil production had reached 3.8m barrels per day, confirming the strong growth following the lifting of sanctions that was already visible last month. Iran’s oil exports have tripled since late 2015.

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Global oil majors look to shed refineries as crude prices rebound

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NEW YORK | BY JESSICA RESNICK-AULTFri Jun 17, 2016

Global oil majors Chevron Corp and Royal Dutch Shell Plc are putting small refineries on the auction block as they look to trim lower-margin assets in the face of headwinds from rising crude oil prices.

Chevron, the second largest U.S. oil company, is soliciting interest in its Burnaby, British Columbia, refinery and gasoline stations, the company told Reuters. Shell is looking for buyers for its Martinez, California, refinery, two people familiar with the situation told Reuters. Shell declined to comment.

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Shell CEO Faces Long Haul in Bid to Pass Exxon as Top Oil Major

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By Rakteem Katakey: June 15, 2016

Royal Dutch Shell Plc Chief Executive Officer Ben Van Beurden spelled out his main goal last week — surpass Exxon Mobil Corp. to become the best-performing oil major. 

“I am determined to get us to that number one place,” he said after outlining the company’s long-term strategy in London. “I want to create a world class investment case for Shell and our shareholders.” 

There are signs Van Beurden is winning over some investors following his record $54 billion acquisition of BG Group Plc. Shell has closed the gap on Exxon for total shareholder returns, which accounts for share prices, dividend payouts and buybacks, after lagging behind for five years. Still, the Anglo-Dutch explorer trails its U.S. rival on a range of other metrics from return on capital and assets to cash flow.

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Royal Dutch Shell Should Acquire Noble Corporation

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The Value Portfolio: Jun. 15, 2016 2:04 AM ET

Summary

  • Royal Dutch Shell’s capital markets presentation shows the company’s impressive and growing deepwater ambitions.
  • The company is Noble Corporation’s largest customer and represents more than 60% of its backlog.
  • The acquisition of Noble Corporation will bring Royal Dutch Shell returns higher than the present returns it expects to get from deepwater drilling overall.

Introduction

Royal Dutch Shell (NYSE: RDS.A) (NYSE: RDS.B) is an Anglo-Dutch multinational oil & gas company headquartered in the Netherlands and incorporated in the United Kingdom. It is the second-largest publicly traded oil company in the world, with a market cap of just under $200 billion, second only to Exxon Mobil (NYSE: XOM) with a market cap of $378 billion.

Noble Corporation (NYSE: NE) is an offshore drilling contractor also incorporated in London, the United Kingdom. It is the successor of the Noble Drilling Corporation and operates by providing drilling rigs to various oil companies in exchange for contracts. However, since Noble Corporation does not have Royal Dutch Shell’s oil major status, the company has seen its stock price decimated since the start of the oil crash.

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Royal Dutch Shell, Chevron Corporation: Niger Delta Avengers Agree to Peace Talks

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By Staff WriterJun 14, 2016

Screen Shot 2016-05-21 at 10.18.28Finally, Royal Dutch Shell plc (ADR) (NYSE:RDS.A), Chevron and other oil and gas companies can heave a sigh of relief as the militant group, Niger Delta Avengers has agreed to consider peace talks with the Nigerian government. The group has said that it does not have new demands, as it just wants foreign oil and gas companies to leave the southern region of the Niger Delta and stop oil pollution.

The group said it wants “genuine attitude” by the government and a “conducive atmosphere” to carry out dialogue. This is definitely good news for the Nigerian economy and international energy companies which have suffered badly in the past few months. The Avengers started to attack oil infrastructure in February, when they blew up Shell’s Forcados terminal and under-water pipeline.

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Nigeria: Shell Loses 130,000 BPD Over Facility Shutdown

Screen Shot 2016-06-14 at 16.35.33Shell confirmed to Reuters that the pipeline suffered a leak but the company has not commented on the cause.

Also a source close to the matter informed Reuters that the line could be offline for at least a week, shutting down about 130,000 barrels per day of production.

The leak comes just as Shell finished repair work on the Nembe Creek Trunk Line. The Nembe line was shutdown in early May after a leak was discovered.

The TNP transports around 180,000 barrels of crude oil per day to the Bonny Export Terminal and is part of the gas liquids evacuation infrastructure that is critical for domestic power generation and liquefied gas exports.

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Much ado about ethane: Why Shell is interested in this gas that goes into many products

Screen Shot 2016-06-14 at 16.25.49By Anya Litvak / Pittsburgh Post-Gazette: June 14, 2016

Ethane, the gas around which Royal Dutch Shell has vowed to build a multibillion-dollar petrochemical mecca in Beaver County, has never been the star of the show.

Since the beginning of Marcellus Shale development a decade ago, ethane has swung between perk and burden. The hydrocarbon is recovered along with methane — the main ingredient of commercial natural gas — and either can be left in the gas stream to boost its energy content or be separated and sold to so-called cracker plants.

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BP plc, Royal Dutch Shell: A Major Shift in Energy Industry on its Way

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By Gas By Staff WriterJun 13, 2016 at 11:34 am EST

As awareness about the hazardous effects of fossil fuels is increasing, and governments and environmentalist groups are encouraging the use of renewable energy sources, it seems as if a major change in global energy sector is on its way. Over the past few years, the global energy arena has witnessed a number of changes, as coal has lost its dominant position in the industry, while consumption of renewable energy sources has increased in power generation.

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What the future of the petrol station looks like, from renewable energies to driverless cars

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Lauren Davidson12 JUNE 2016 • 11:44PM

It’s a wonder Istvan Kapitany, executive vice-president of retail at Royal Dutch Shell, gets any work done. The view from his office on the 22nd floor of Shell’s headquarters on the South Bank looks out over some of the most impressive landmarks in the capital, including the London Eye and the Palace of Westminster.

Though not at the top level just yet – the Shell Centre has 26 floors – Kapitany has certainly climbed his way through the ranks since joining Shell in 1987 as a petrol station manager in Hungary, his home country.

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Coming wave of gas puts focus on finding new shores

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Screen Shot 2016-06-06 at 10.26.15LONDON | BY RON BOUSSO AND OLEG VUKMANOVIC: Sun Jun 12, 2016

Energy giants such as Royal Dutch Shell and Total are looking to build terminals and power plants in new markets to soak up the industry’s rapidly burgeoning supply.

Companies have invested billions in plants to produce liquefied natural gas (LNG) in places such as Australia and the United States.

But gas demand growth is slowing, prices are down and the LNG volumes companies are set to produce will exceed those even major buyers such as China and Japan can absorb.

That has turned attention to the downstream market and opportunities to create new markets from Ivory Coast to remote Indonesian islands by building gas-fired power plants, pipelines, regasification and storage terminals.

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Shell set to retreat from North Sea in global asset shakeup

Screen Shot 2016-06-11 at 22.39.18The company has already cut hundreds of jobs from its UK workforce. In the clearest sign yet that Britain’s biggest company will turn its back on the “super mature” North Sea, Shell told investors its planned $30bn sales drive to tackle its debt burden will focus on mature assets in established oil regions.

Shell’s chief executive, Ben Van Beurden, laid out the company’s strategic plan for the rest of the decade, telling shareholders the group plans to leave between five and 10 mature oil regions, which equity analysts have interpreted as a “heavy hint” that UK assets will be included.

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Waiting for Big Oil to clean up its act

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Screen Shot 2016-06-11 at 22.29.07By Jillian Ambrose

11 JUNE 2016 • 7:22PM

“The world is going to have to continue using fossil fuels, whether they like it or not.” There’s little disguising the defiance in the words of Exxonmobil chief Rex Tillerson.

In a Dallas concert hall, less than six months after the historic global climate deal in Paris, the long-standing leader of the world’s largest listed oil company locked horns with shareholders in an increasingly familiar battle for Big Oil.

For years, placard-wielding green activists have raised warnings that echo the financial collapse: a “carbon bubble” could leave markets reeling as trillions of dollars’ worth of existing fossil fuel assets become worthless in a low-carbon world.

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Royal Dutch Shell Set to sink?

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By Royston Wild – Saturday, 11 June, 2016

The possibility of protracted earnings pain also makes Royal Dutch Shell (LSE: RDSB) a gamble too far, in my opinion.

At face value, charging oil prices may be at odds with my bearish take on the state of the market. Indeed, the Brent index surged above the $52 per barrel marker for the first time since October this week, helped by supply disruptions in Nigeria and a weaker US dollar.

However, the long-term outlook for crude values remains on thin ice, in my opinion. Production from OPEC and Russia continues to blast higher, while patchy economic growth means that bloated inventory levels are likely to persist, a situation that could send black gold prices sinking again.

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Shell’s Legal Offshoring a Sign of Things to Come

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Facing an era of lower oil prices, Shell announced plans on June 7 to cut company costs and become more efficient…

Sue Reisinger, Corporate Counsel: June 10, 2016

The announcement by Royal Dutch Shell that it plans to open an offshore legal operations center illustrates a growing trend, according to industry experts.

Facing an era of lower oil prices, Shell announced plans on June 7 to cut company costs and become more efficient. Part of those plans includes opening an offshore legal center, as have a few other companies and several major law firms. Shell legal director Donny Ching told the Law Society Gazette in London that the move would relate to “some specific parts of our work where it makes sense to consolidate services, increase efficiencies and reduce costs.”

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Bad news for fossil fuels

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By Ed Crooks: June 10. 2016

Two of the most widely respected energy analysts – BP’s economics team and the International Energy Agency – published reports this week, and both brought bad news for fossil fuel producers. They differed, however, in the focus of their gloomy perspectives. For BP, publishing its 65th annual Statistical Review of World Energy, it was coal that came off worst. As Spencer Dale, BP’s chief economist, put it in his presentation, “2015 was undoubtedly an annus horribilis for coal”. The shift to natural gas for power generation in the US gathered pace, and there was a second consecutive year of declining consumption in China.

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Britain to shed a quarter of its oil jobs since price fell – industry

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Friday 10 June 2016

Screen Shot 2016-05-21 at 10.18.28LONDON (Reuters) – As many as 120,000 oil workers will have lost their jobs in Britain by the end of the year compared to mid-2014 when oil prices started declining and unleashed sector-wide cost cuts, the industry’s lobby group said on Friday.

Britain’s oil industry and indirectly related jobs like supply chain and services are estimated to fall to 330,000 by the end of the year, down from 450,000 in 2014, Oil and Gas UK said in a report.

Major British oil industry employers like Royal Dutch Shell (RDSa.L), BP (BP.L) and Chevron (CVX.N) have all announced substantial job cuts in order to rein in costs as revenues have been hit hard by weak oil prices.

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Niger Delta Avengers blow up another Shell facility

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Chrisantus Obi-Ezechukwu: Friday, 10th June 2016

Screen Shot 2016-05-21 at 10.18.28New militant group, Niger Delta Avengers, last night blew up another oil facility belonging to Shell Petroleum Development Company (SPDC).

The facility is said to be around Ogidigben, Warri South West Local in Delta State.

It was learnt that the incident occurred after 8p.m.

“The incident occurred along the Chanomi Creek around Ogidigben area. We got reports from our field office that a loud explosion was heard at the location, which was followed by a huge ball of fire,” a source said.

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Shell makes $4bn North Sea investment pledge

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Written by Energy reporter – 10/06/2016 7:56 am

Royal Dutch Shell said its spending plans will include a cash injection of around $4billion for the North Sea.

The investment drive will be rolled out between this year and 2018 and is understood to be line with its previous expenditure in the region.

The energy giant announced on Tuesday that it would scale down global investment and pinpoint further savings as it grapples with lower oil prices.

Paul Goodfellow, Shell’s vice president for Upstream in UK & Ireland, told the Press Association that it will “include significant investments with our partners West of Shetland in the Clair and Schiehallion projects in which Shell has a 28% and 55% share respectively.”

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Leak reportedly shuts Nigeria’s Trans Niger Pipeline

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Jun 9 2016, 17:26 ET | By: Carl Surran, SA News Editor

Nigeria’s Trans Niger Pipeline, one of two major pipelines that carries the Bonny Light crude grade for export, was shut down yesterday after a leak was found, Upstream reports.

Royal Dutch Shell (RDS.A, RDS.B), one of TNP’s partners, confirmed that the pipeline had shut down but declined to comment further; the other partners are Total (NYSE:TOT), Eni (NYSE:E) and Nigerian National Petroleum Corp.

The shutdown comes just as repairs were completed on the Nembe Creek Trunk Line that also moves Nigeria’s major export grade.

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What Caused Royal Dutch Shell’s Shares To Soar

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Arie Goren: Jun. 9, 2016 6:14 AM ET

Screen Shot 2016-05-21 at 10.18.28Summary

  • In its Tuesday, June 7, investor meeting, Shell offered a very encouraging update on the company’s strategy, which sets a clear course for stronger returns and free cash flow.
  • Oil prices have shown a significant rebound in the last five months. As such, we can expect much better results for Shell’s upstream operations in the forward quarters.
  • Investing in a supermajor integrated oil & gas company like Royal Dutch Shell will give investors a significant price appreciation when oil prices recover along very generous dividend yielding 7.1%.
  • In my view, we can learn from the company’s new strategy that the dividend is sustainable.

Shares of Royal Dutch Shell (NYSE:RDS.A) (NYSE:RDS.B) soared in the last two days after its Chief Executive Officer Ben van Beurden provided on Tuesday, June 7, an update on the company’s strategy, that according to the company, sets a clear course for stronger returns and free cash flow. Shares of RDS.A have increased 6.43% in the last two days and shares of RDS.B have risen 6.58%.

Since the beginning of the year, RDS.A’s stock is already up 15.7% while the S&P 500 Index has increased 3.7% and the NASDAQ Composite Index has lost 0.7%. However, since the beginning of 2012, RDS.A’s stock has lost 27.5%. In this period, the S&P 500 Index has increased 68.5% and the Nasdaq Composite Index has risen 91%.

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Shell signals retreat from North Sea amid further cost cutting

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Screen Shot 2016-05-21 at 10.18.28By MARK WILLIAMSON: 8 June 2016

ROYAL Dutch Shell has given a further signal it will retreat from the North Sea as the company said it will continue with deep cuts in spending amid the crude price plunge.

Chief executive Ben van Beurden said the oil and gas giant will focus investment on the kind of big fields which will generate high returns over the long term and which the company has made clear are in short supply in the North Sea.

Shell is investing heavily in two giant fields West of Shetland with BP, which are due to come onstream in coming months and could be in production for years, but has nothing similar in the pipeline.

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Shell resumes Iranian oil purchases

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Wed Jun 8, 2016 10:00am EDT

Royal Dutch Shell has resumed purchases of Iranian crude, becoming the second major oil firm after Total to restart trade with Tehran after the lifting of sanctions, trading sources said and ship tracking data showed.

Iran has been trying to claw back its market share since international sanctions were lifted in January and regaining a major buyer such as Shell will further aid its cause.

Shell declined to comment.

According to shipping data, Shell fixed Suezmax tanker Delta Hellas to bring 130,000 tonnes of Iranian crude from Kharg Island on July 8 to continental Europe.

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Royal Dutch Shell Carries Out Repair Works in Nigeria Despite Security Threats

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By Micheal KaufmanJun 8, 2016 at 10:50 am EST

Although Royal Dutch Shell plc (ADR) (NYSE:RDS.A) is carrying out repair-work at two sites in Nigeria, the company said it could not “operate or repair” the facilities in the Niger Delta if its employees are not safe. The militant group, Niger Delta Avengers, has attacked Shell’s Nigerian facilities thrice in the past five months.

Attacks

First, the militants attacked Shell Forcados terminal and an under-water pipeline in February. The pipeline links offshore port with the onshore crude oil storage tanks. This was the first time that the group carried out an attack in public.

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Shell cuts cost for the rest of the decade after takeover

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By DAVID SHANDPUBLISHED: 00:03, Wed, Jun 8, 2016

The company set out its plans to create a “world class investment case” for shareholders following its £35billion takeover of fellow FTSE 100 oil and gas giant BG Group, which will include more asset sales and cost-cutting.

In its presentation to investors, Shell said it would squeeze an extra $1billion (£690million) in savings from the BG deal from an earlier $3.5billion forecast.

It aims to sell 10 per cent of its oil and gas production by exiting operations in up to 10 countries.

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Shell-Operated Nigeria Pipeline Said to Be Under Repair

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Screen Shot 2016-06-07 at 23.34.38Javier Blas: June 7, 2016

Repair work on a key Nigerian crude oil pipeline operated by Royal Dutch Shell Plc is ongoing under very tight security, according to a person familiar with the operations.

The repairs were being carried out in two different sites of the Forcados export pipeline, which was hit by explosions in February and again last week, said the person, who asked not to be named because of security concerns. Earlier Chief Financial Officer Simon Henry said the company had to withdraw repair crews last week after a second attack against the 48-inch Forcados pipeline that links onshore storage tanks with an offshore port.

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Royal Dutch Shell’s High-Wire Act

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By PAUL J. DAVIES: June 7, 2016 11:48 a.m. ET

For Royal Dutch Shell , austerity is tricky. The Anglo-Dutch oil and gas group is doing almost everything it can to make its finances work. The trouble for investors is that it still may not be enough.

Shell has found more cost savings more quickly from its takeover of BG Group and is slashing its investment plans back to almost the minimum needed to keep producing. But without a recovery in oil and gas prices it will struggle to balance its long-term prospects with near-term promises.

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Shell’s Big Find

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Screen Shot 2016-06-06 at 10.26.15By Chris Hughes: June 7, 2016

Shell is learning not to waste a crisis.

The Anglo-Dutch oil major is pulling on every lever to deal with the consequences of agreeing a takeover of rival BG Group just before the oil price collapsed last year. Shareholders can only hope that the zeal it now shows for running a tight ship will endure once the company is on a surer footing.

The $54 billion cash-and-shares purchase of BG was completed in the first quarter, just as the oil price hit rock bottom. As of March 31, Shell’s net borrowings had shot up from $27 billion to $70 billion. Operating cash flow on a 12-month rolling basis was $23 billion — too low for a company then targeting $33 billion of annual capital expenditure and accustomed to paying $10 billion of cash dividends annually, even allowing for a contribution from BG. No wonder analysts have been penciling in dividend cuts.

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Shell’s bonus for City as drilling for savings yields extra $1 billion

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RUSSELL LYNCH: 7 June 2016

Royal Dutch Shell boss Ben van Beurden delivered a $1 billion (£688 million) present to the City today as he pumped up more savings from the oil major’s $54 billion mega-merger with rival BG Group.

The shares rose almost 3%, or 48p, to 1749p as the cost-cutting drive, which has stepped up a gear since the deal completed in January, now promises $4.5 billion in savings by 2018. 

That compares with the $3.5 billion previously estimated.

The latest savings will not involve further job cuts on top of the extra 2200 announced two weeks ago by the firm, which took the total number of jobs shed through the merger to at least 12,500. 

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Shell asset sales on track, no plans for ‘Baby Shell’ IPO: CEO

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Holly Ellyatt | Stephen Sedgwick: 7 June 2016

Royal Dutch Shell‘s plans to sell off assets and pull out of up to 10 countries are on track, the oil major’s chief executive told CNBC on Tuesday, putting to bed rumors of a spin-off of non-core assets into a “Baby Shell.”

On the company’s capital markets day in London, Shell in a statement said that it was taking action to deliver on lower costs, lower spending. asset sales and “profitable new projects.”

In terms of asset sales, the company confirmed these were expected to total $30 billion for the 2016-2018 period.

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Shell Deepens Spending Cuts, Promises More Savings From BG

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By Rakteem Katakey and Ryan Chilcote: June 7, 2016

Royal Dutch Shell Plc cut spending plans further and promised increased savings following its record purchase of BG Group Plc, as Europe’s largest oil company continues to adjust to the slump in energy prices.

Shell will spend $29 billion this year, it said Tuesday. That compares with a May forecast for capital expenditure “trending toward” $30 billion, which was itself down from an earlier projection of $33 billion. Synergies from the BG acquisition will provide $4.5 billion in savings in 2018, up from an earlier estimate of $3.5 billion.

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Shell aims for steeper cost cuts after BG takeover

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Kiran Stacey, Energy Correspondent: June 7, 2016 8.03am

Royal Dutch Shell is aiming to make steeper cost cuts than previously planned as a result of its £35bn takeover of rival BG Group, the company has said.

The international oil company gave investors an update on its long-term strategy on Tuesday, in which it tried to reassure the market about the amount of debt it has taken on as a result of the purchase, which was completed in February.

FULL FT ARTICLE

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Shell caps spending for rest of the decade as belt tightening continues

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By Jon Yeomans7 JUNE 2016 • 9:33AM

Oil giant Shell is targeting yet more cost savings as it looks to pay down debt and protect its dividend in an era of lower oil prices.

The Anglo Dutch giant said today capital spending would be in the range of $25-$30bn a year to 2020. For 2016 it will be $29bn, down from a forecast “trending toward” $30bn, which was itself down from an earlier projection of $33bn.

The company said this spending could go even lower if oil prices sink below their current levels, but crucially would not go higher if oil surges. Crude has stabilised at around $50 a barrel, after hitting a 12-year low of $28 a barrel in January. It was trading at more than $100 two years ago. 

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Shell to exit up to 10 countries after BG deal

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LONDON | BY RON BOUSSO AND KAROLIN SCHAPS: Tue Jun 7, 2016

Royal Dutch Shell (RDSa.L) will exit oil and gas operations in up to 10 countries in a drive to deepen cost cuts and narrow its focus following its $54 billion acquisition of BG Group.

Presenting its strategy following the close of that deal in February, the Anglo-Dutch company outlined plans to target annual spending of $25 billion to $30 billion until the end of the decade.

It lowered its planned 2016 capex to $29 billion in a third cut from an initial $35 billion.

Shell also raised its target for savings from the integration of BG to $4.5 billion, up $1 billion from previous guidance.

Chief Executive Officer Ben van Beurden hopes the new cuts will help boost Shell’s shares, which have underperformed rivals since the BG deal was announced in April 2015.

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FT: Shell’s asset disposal plans face delay

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By: Carl Surran, SA News Editor: Jun 6, 2016

Royal Dutch Shell’s (RDS.A, RDS.B) $30B asset disposal plan put in place after its takeover of BG Group likely will drag on beyond 2018 if oil prices remain depressed, Financial Times reports.

Shell is planning to sell off a large chunk of its portfolio because the BG deal significantly increases the combined group’s debt load, but people involved in the sale process tell FT that while that timeline is still in place, the deadline could be pushed back if Shell cannot secure what it thinks the assets are worth.

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Will Royal Dutch Shell plc survive the oil crisis?

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By Peter Stephens – Monday, 6 June, 2016

With the price of oil having risen from $28 per barrel earlier this year to around $50 per barrel, many investors may feel as though the worst is now over. Certainly, such a rapid gain in the price of any asset indicates a step change in investor sentiment and looking ahead, the price of oil could rise yet further. However, with there being a major imbalance between the supply of and demand for oil, its price could easily come under further pressure in the short-to-medium term.

In such a situation, it may be prudent for investors to hold shares in oil stocks with sound financial backgrounds. One such company is Shell (LSE: RDSB), with it having a strong balance sheet and excellent cash flow. In fact, evidence of Shell’s financial strength can be seen in its acquisition of BG Group during the oil crisis. This indicates that Shell is very confident in its ability to survive a low-oil-price environment. And with it having a debt-to-equity ratio of just 41% even after the acquisition of BG, it seems capable of making further acquisitions in future.

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Shell share price: Group set to unveil deeper cost cuts

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by Tsveta Zikolova

Monday, 06 Jun 2016, 09:25 BST

Royal Dutch Shell (LON:RDSA) is set to lay out plans for deeper cost cuts and a potential delay in its asset sale programme when it updates investors on its strategy tomorrow, The Sunday Times has revealed. The update will come as the group’s chief executive Ben van Beurden is under increasing pressure to justify the £35-billion acquisition of BG Group which completed earlier this year.

Shell’s share price has advanced in London this morning, having gained 1.55 percent to 1,702.00p as of 08:54 BST, and outperforming the benchmark FTSE 100 index which currently stands 0.73 percent higher at 6,254.90 points. The Anglo-Dutch group’s shares have lost some 10 percent of their value over the past year, but are up more than 11 percent in the year-to-date.

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Chevron, Shell: Will Nigerian Crude Production Come to a Halt?

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By Micheal KaufmanJun 4, 2016 at 10:50 am EST

The Nigerian government’s problems are only expected to worsen; the militant group, Niger Delta Avengers, has vowed again to bring the country’s crude oil production to “zero.” In the past few months, the group has attacked oil and gas facilities of foreign energy companies, including Chevron, Shell, and Eni, in a bid to force them to leave the southern region of the Niger Delta. The militants want international oil companies to end oil pollution in the country and give a higher share of crude sale revenue to the locals.

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