News and information on Royal Dutch Shell Plc.
March 18 (Reuters) – Shell International Finance BV on Thursday sold $4.25 billion of senior unsecured notes in three parts, said IFR, a Thomson Reuters service. The notes are guaranteed by Royal Dutch Shell PLC.
Barclays Capital, Credit Suisse and the Royal Bank of Scotland were the joint bookrunning managers for the sale.
By Deborah Hyde | 07:47:24 | 18 March 2010
Oil major Royal Dutch Shell’s management says the group’s transformation over the next couple of years will be significant and it can begin to lift its dividend again from next year.
CEO Peter Voser said: ‘These are exciting times for Shell. We are poised to deliver a new wave of financial and production growth.’
He said the group is making substantial investments in new projects to drive Shell’s financial performance going forward.
‘Shell should be in a surplus cash flow position in 2012, after capital investment and dividend payments, assuming $60 oil prices and a more normal environment for natural gas prices and downstream.’
That is a big promise from the group which has traditionally been more dependent on higher oil prices than many of its peers.
Shell has underperformed in recent years (up only 13.5% versus 22.5% at BP over two years) as BP began its transformation much earlier and has been able to grow its dividend despite lower oil prices.
Speaking at a strategy meeting this week, Shell’s management made a convincing case that it can do what it takes to turn its business around, prompting Soc Gen analysts to lift their price target to £22.30 and even the less optimistic UBS team lifted its target to £19.
With analysts pretty evenly split between those advising investors to buy the shares and those who remain more cautious, the key now is whether Voser and his team can deliver on these ambitious plans.
‘The underlying story for Royal Dutch Shell from 2012 is compelling,’ said Richard Griffith analyst at Evolution Securities.
But he has a ’reduce’ recommendation on the shares since the recovery means Shell needs to complete a number of key projects in order to turn its finances around.
‘In other words Shell is dependent on a positive macroeconomic environment to keep short term gearing under control before the underlying performance can assert itself in 2012 and beyond,’ said Griffith.
Given the erosion of dividends on the FTSE 100, income investors will also be cheered by the group’s plan to lift its dividend – in dollar terms at least – from next year.
But Lucy Haskins at Barclays Capital and Alistair Syme at Nomura remain worried by the fact that in the near-term at least Shell will continue to finance the dividend from debt.
Syme said he doesn’t think Shell is mis-priced based on its own profitability outlook and doesn’t see any reason why investors should take the risk on a business that has:
Haskins believes Shell is being overly optimistic about the outlook for refining margins and that a mistake here could see the cashflow come in below Shell’s guidance.
But even she is lifting her price target to £20.50 to reflect the higher cash generation forecasts.
And the top rated analysts – based on the accuracy of their forecasts - at Citigroup and Goldman Sachs are much more upbeat. Both Mark A Fletcher and Michele della Vigna have ‘buy’ views on the shares. They see good upside potential of 13.3% and 42% respectively.
Vigna said Shell’s presentation included a very detailed plan on how the group expects to achieve 11% production growth and 50% cash flow growth by 2012 even if the oil price remains at current levels.
At $80 per barrel, cash flow would climb to $43 billion from $24 billion in 2009, Shell said.
‘This would be the strongest cash flow growth story amongst big oils (excluding the emerging market names), with a clear path to delivery, as all the major projects underpinning this growth appear to be within 12 months of completion,’ said Vigna, adding that would bring Shell from sub-sector to sector leading profitability.
‘This is likely to be a driver of re-rating over the coming 12-months, as the market becomes more confident over the delivery of these projects,’ Vigna said.
Given Vigna’s estimates for Shell earnings are 25% above consensus for 2011, he believes positive earnings revisions will be another important performance driver for Shell.
Fletcher’s optimism also reflects Shell’s plan to lift production by 2-3% per annum and the planned reserve replacement rate of more than 200% which he said is more than adequate to fuel growth.
Like Vigna he believes the market has misunderstood the potential at Shell.
‘Visibility on the trajectory of growth, capex and cash flow remains low, but we believe that it will improve over the next 12 months as project delivery provides the impetus to unlock material upside.’ he said.
He said the underlying story that emerges should be a powerful mix of growth, declining capital expenditure and free cash accretion.
‘We believe that the market is not pricing-in this potential, with the current share price discounting an inconsistent combination of declining volumes, but persistently high capex,’ he said.
By Dan Molinski Of DOW JONES NEWSWIRES MARCH 18, 2010, 9:28 A.M. ET
CARACAS (Dow Jones)–Royal Dutch Shell PLC (RDSB) moved Thursday to clear up what it calls a “misunderstanding” regarding sharply critical remarks of Venezuela reportedly made by one of the oil company’s top officials.
Shell on Tuesday said international oil majors have mostly lost interest in investing in Venezuela, according to Reuters news agency, following leftist President Hugo Chavez’s nationalization of assets in recent years.
“They are desperately inviting people back in, but no one’s going there,” Shell Chief Financial Officer Simon Henry told reporters on the sidelines of a press conference in London, Reuters said.
But in a statement sent Thursday from Shell’s offices in Caracas, the company said that what the company meant to explain was the challenges for international oil companies with regards to access to global markets, and how decisions are made based on several factors.
Among those factors, it said, “is the availability of capital for mega projects.”
The statement didn’t deny the official made the comments that were reported.
“Shell maintains its confidence in Venezuela, its people, its natural resources,” the statement went on to say, adding that it has been in the South American nation for 98 years.
Venezuela last month awarded two promising oil blocks in the petroleum-rich Orinoco region to consortiums that include U.S.-based Chevron (CVX) and Spain’s Repsol YPF (REP). A third block up for bidding went unassigned, and analysts called the auction a moderate success for Venezuela.
-By Dan Molinski, Dow Jones Newswires; 58-414-120-5738; dan.molinski@dowjones.com
Linda Cook: 29 years’ service with Shell. Photograph: Adrian Dennis/Rex Features
17 March 2010
Mark Cobley
–write to mcobley@efinancialnews.com
Ian Lyall, Daily Mail
16 March 2010, 9:52pm
He said he was ‘energised’ and up for the fight. But as he stood at the podium to deliver the company’s annual strategy review, Shell boss Peter Voser (right) looked anything but.
His audience of a hundred or so British and foreign journalists listened with an air of resignation rather than in rapt attention.
Voser isn’t a natural orator. His clipped Swiss accent and the dry delivery may work well around the boardroom table, but his style is hardly inspirational.
Which is a pity. Because his message was an uplifting one for Shell investors, and addressed the concerns of the critics who dismiss the Anglo-Dutch giant as low growth, bureaucratic and bloated.
Voser’s trick was to come up with a fairly punchy production target and spice it with a subtle change of direction and emphasis.
And it seemed to work, with the company’s London-listed A shares rising 27.5p to close the day at 2920p.
The briefing re- capped the impact Voser has made in his short tenure. Since becoming chief executive in the summer of last year, he has spearheaded an impressive $2bn cost cutting drive that has seen the loss off 5,000 jobs, mostly mid-ranking managerial posts.
An extension to that programme was unveiled yesterday. It will save another $1bn by cutting a further 1,000 roles, though the workforce still numbers more than 100,000.
But what grabbed the analysts’ attention was his plans to have Shell pumping around 3.5m barrels of oil a day by 2012.
This implies an annual growth rate of 3.5%, which is well ahead of the rather pedestrian performance of rival BP at around 1.5%.
Shell even seems to have raised its game in finding new oil and gas fields, with its reserve replacement rate running at a healthy 288%.
Voser showed he recognised the lingering misgivings of investors, though he was careful to couch the message in diplomatic terms that wouldn’t offend his colleagues and predecessor.
‘When I became chief executive in the middle of last year, I did think the organisation of the company was working against us,’ he told the meeting at a central London hotel.
‘Shell had become too complicated, and slower than I’d like, and working on too many areas and options.’
The simplification of Shell, which has many moving parts, is borne out of necessity.
With the oil price hovering at, or close to, $80 a barrel, more investment is going into exploration and production.
For recession-hit refining, in the middle of the worst slump in 20 years, the pendulum has swung the other way. Capacity is set to be cut by around 15%, with plants sold or even shut down.
And the marketing operation, which owns the company’s filling stations and also sells motor oil and jet fuel, is also undergoing a shake-up. It is focusing on fewer markets to improve profitability.
Only one of the laggards seems to have been spared the Voser treatment: Shell’s gas business.
It has been hit by the downturn but is deemed to be a fundamentally sound business.
Voser trumpeted a series of exploration success stories that tell a tale of a growing conservatism, so we heard about the company’s strikes in the Gulf of Mexico, Australia and North America.
Relatively expensive regions in which to work, they do have the upside of being politically stable and incredibly easy places to do business.
Air-brushed from the literature were the likes of Nigeria and Russia.
It was only when prodded that Voser commented on the war-torn African nation, where the oil reserves are plentiful, but the region is a mess of infighting and instability: ‘In the past, as I have said many times, Shell has depended a lot on the growth of Nigeria. In today’s situation, we still have the same growth potential in Nigeria. But we have seeded plenty of projects in other parts of the world where we also can achieve growth.’
Hardly a ringing endorsement of the country’s prospects.
Some analysts, such as Collins Stewart’s Gordon Grey, see Voser’s latest strategy pronouncement as ‘an important turning point operationally’ for Shell.
The respected and experienced Richard Griffith of Evolution has been following the company for far too long to be totally convinced: ‘It’s a positive statement, but there is still plenty to be delivered.’
Daily Mail
17 March 2010, 8:11am
Linda Cook, the former head of Shell’s oil and gas division, received a £5m compensation payment after losing out on the role of chief executive to Peter Voser.
 |
| Compensation: Linda Cook |
The revelation came in the firm’s annual report and will overshadow a well received strategy update by Voser.
His earnings were £2.9m last year.
By Will Kennedy and Andrea Catherwood
March 17 (Bloomberg) — Royal Dutch Shell Plc Chief Executive Officer Peter Voser said industry costs have started to rise and the company will use technology to control spending as it invests $100 billion to boost production.
“Costs have not come down as much as we hoped for, and some of them are now rising again,” Voser said in an interview with Bloomberg Television broadcast today. Shell’s challenge is to be “more speedy in terms of technology implementation.”
Shell, vying with BP Plc as Europe’s biggest oil company, said yesterday it’s assessing more than 35 projects to keep production rising until 2020. Australia, where the company is developing offshore and coal-seam gas reserves, may attract as much as 40 percent of Shell’s capital expenditure. It has higher wage rates than other countries where the company operates.
“In Australia, we are doing floating LNG, which is actually fabricated in Korea, so we will be less exposed to the labor costs,” Voser said in London. We need to do “things differently in the future so that you actually save costs and get things built cheaper.”
Crude prices doubled to more than $80 a barrel in the past year, prompting producers to resume projects put on hold during the recession. Oil and gas industry spending will rise 11 percent this year to $439 billion, according to Barclays Capital. Increased investment may start to reverse reductions in drilling and engineering costs caused by the global slowdown.
Raise Production
Voser, speaking to analysts at the company’s annual strategy briefing, outlined plans to raise oil and gas production 11 percent by 2012 to 3.5 million barrels a day. The company’s capital expenditure, set at $28 billion this year, will be between $25 billion and $27 billion from 2011 to 2014.
Investment in production will be focused on three main areas, Voser said in the interview. These are Australia, the Gulf of Mexico and so-called tight gas in the U.S., where recently developed drilling techniques are used to access resources trapped between rocks.
“On top of that we have other projects in areas like Kazakhstan, like Nigeria, in the Middle East we have Iraq,” he said. “We have got a vast set of opportunities. I’m very pleased with the variety we have in the portfolio, so if one doesn’t come, we’ve got others to replace those.”
Shell yesterday announced plans to cut staff by a further 1,000 people, making the overall reduction of 7,000 in the three years through 2011. Voser has said he will cut costs by $1 billion this year, after reducing them by $2 billion last year.
The company plans to sell filling stations and oil refineries to free up capital for production spending. Shell is negotiating with India’s Essar Oil Ltd. to sell three European plants after the recession cut fuel-processing profits.
“You need bigger refineries, more complex refineries, because they can withstand recessions better than smaller refineries,” Voser said.
To contact the reporters on this story: Will Kennedy in London at wkennedy3@bloomberg.net; Andrea Catherwood in London at acatherwood@bloomberg.net.
Last Updated: March 17, 2010 05:09 EDT
Daily Telegraph: Royal Dutch Shell has unveiled the most dramatic overhaul of its business in recent memory, outlining plans to exit more than a third of its 90 retail markets, slash refining capacity and return to growth after seven years of falling output.By Garry White
Published: 10:10PM GMT 16 Mar 2010
Peter Voser, chief executive, unveiled a further 1,000 jobs cuts in addition to the 6,000 already announced as he vowed to “sharpen up” Shell in the next three years by boosting output by 11pc.
“Shell has been disadvantaged recently, due to our higher exposure to refining and natural gas, where margins are hard-wired to the economy,” Mr Voser said.
“The priorities are for a more competitive performance, for growth, and for sharper delivery of strategy. We have more to do to drive out cost and improve the operating performance in the company.”
Shell plans to exit 35pc of its petrol station markets and reduce refining capacity by 15pc to help it make cost saving of $1bn (£658m) this year. It also said it would sell non-core assets worth $1bn-$3bn a year, including its refineries in Gothenburg, Los Angeles and New Zealand.
Monday is the deadline for bids for the company’s liquified petroleum gas distribution arm, which could raise £1.1bn. Those understood to be tabling offers include Brazilian chemicals group Ultrapar, Centrica spin-off DCC and French listed Rubis, as well as a number of private equity groups.
“Upstream, we have built up strong foundations in activities like gas-to-liquids, oil sands and liquefied natural gas,” Mr Voser said. “Looking out to 2020, I expect Shell’s exploration to underpin new upstream growth, especially in North America and Australia, with additional barrels from development-led projects.”
The news came on the day that Shell released its annual report, which showed that Mr Voser earned less than Tony Hayward, chief executive of rival BP, in 2009. Mr Voser earned a total salary and bonus of £2.8m compared with Mr Hayward’s £4m.
Shell has said it would freeze management salaries until 2011 after shareholders objected last year when executives were awarded bonuses even after performance targets were missed.
Linda Cook, who resigned as head of Shell’s gas and power business in May last year, was paid a salary and bonus of £2.1m as well as a severance payment of almost €5.5m (£5m). She leaves with a total pension pot of just under $25m. Mr Voser’s predecessor, Jeroen van der Veer, left with a pension pot worth $34.2m.
Shell predicts oil will trade between $50 and $90 a barrel over the next few years and is targeting output of 3.5m barrels of oil equivalent per day in 2012. This compares to 3.15m in 2009, the equivalent to an annual growth rate of 3.5pc, or 11pc in total over three years
Mr Voser said the company should be in a surplus cash flow position in 2012, after capital investment and dividend payments – assuming $60 oil prices and a more normal environment for natural gas prices and downstream. In order to achieve this it will have to invest between $25bn and $27 a year in its operations.
The Anglo Dutch group also said that it replaced 288pc of its oil and gas output with new discoveries in 2009, or 3.42bn barrels of oil equivalent.
RELATED TELEGRAPH ARTICLES
By John Donovan
On 31 March, Richard Wiseman, the Chief Ethics & Compliance Officer of Royal Dutch Shell Plc will be making a speech at a seminar in London: “Best Practice in Combating Corruption Extortion and Bribery“
“The event will examine new developments and tools in fighting corruption and providing practical methods for addressing and investigating extortion and bribery.”
We can only surmise that Mr Wiseman is present on the basis of being a poacher turned gamekeeper.
When he was Legal Director of Shell UK Limited we brought to his attention irrefutable evidence of corrupt practices inside Shell. A Shell executive on the make had plotted with colleagues on how to deceive companies participating in what they foolishly thought was an honest tender process for a major Shell contract. The companies in question were enticed into confidentiality agreements under false pretenses, so that Shell could steal intellectual property from them and prevent them offering it to rival oil companies.
The contract was eventually given to a company which never took part in the tender. A company with whom the Shell executive had a close personal relationship. Evidence shows that he had an offshore bank account and had recorded in his diary a devious plan to set up his own business inside Shell and then retire from the company at the age of 35.
We also brought the extensive documentary evidence of this ruthless conspiracy to the attention of all directors of Shell UK, Shell Transport and Royal Dutch Petroleum. We invited Malcolm Brinded to disassociate himself from the thoroughly dishonest Shell executive in question. Instead of doing so, Shell senior management, including Wiseman, gave him its full backing.
It is therefore the height of hypocrisy that Wiseman was appointed to his current position and even more outrageous that he has the audacity to make another speech on the subject – unless he is giving tips on predatory conduct against small companies lulled into a false sense of security by sham business principles.
By Keith Findlay
Published: 17/03/2010
It emerged yesterday that a further 1,000 positions globally are going, on top of the 5,000 shed in 2009 and 1,000 the firm had previously flagged up for this year.
Shell would not say exactly where the latest cuts in its 101,000-strong worldwide workforce would be, but chief executive Peter Voser said the axe would fall mainly on downstream and corporate roles.
Aberdeen, where Shell employs about 1,800 people, is the hub for the firm’s UK upstream – exploration and production – activities and is, therefore, unlikely to see much of an impact.
But about 8,500 Shell UK workers have been left wondering if the latest round of redundancies will be the last.
Jake Molloy, north-east spokesman for the National Union of Rail, Maritime and Transport Workers, said contractors working offshore were also getting increasingly nervous.
“They are receiving mixed messages of what the future holds for them. There is no clarity at all from Shell right now.”
The company is selling a range of assets in the UK and overseas to help to meet the cost of its £18billion capital spending programme this year.
Earlier this month, it revealed it was looking for a buyer for the Anasuria floating production vessel in the central North Sea plus stakes in associated fields.
Yesterday’s move is part of “firm plans” for about £660million of savings in 2010 and 2,000 job cuts by the end of 2011, including the 1,000 that were announced in February as Shell posted a 69% plunge in annual profits, to £6.1billion.
Also in February, Shell said it had frozen salaries for top bosses to show “appropriate restraint in the current economic environment”.
Mr Voser and finance head Simon Henry, who took on their roles last year, will not see their pay reviewed again until January 2011 under the reforms.
International exploration boss Malcolm Brinded is also affected by the pay freeze, although he has had his salary kept on hold since July 2008, according to Shell.
The group aims to net up to £2billion a year from asset sales as it exits from non-core activities and focuses its downstream business, including refining and forecourt sales, on the most profitable and high-growth areas.
Shell plans to exit from 15% of its worldwide refining capacity and 35% of its current retail markets.
In a strategy update yesterday, the Anglo-Dutch group admitted it had been slow to respond to the global downturn.
But Mr Voser said the firm was entering a “new period of growth” and he pledged to turn around years of under-performance and ramp up production by 11% to 3.5million barrels a day by 2012.
“These are exciting times for Shell,” he said.
“We are poised to deliver a new wave of financial and production growth.
“We are making substantial investments in new projects to drive the financial performance going forward.”
: Dear IMBer, or IBMer, or whatever - if you can explain to me the difference between the two quoted press release examples of geophysical applications in reasoned scientific terms, I shall be more than happy to admit to being a amateur geophysicist (not geologist). Perhaps it is you who is confused. Geophysics and Geology are not the same - close bed fellows, yes - but not the same. If so, then it is you who should get out your needles, wool and get on with "one plain, two purl" rather than embarking on such a commentary.
: Shellwaarbenjijnu has no clue what he/she is talking about. Probably some amateur geologist who wants to be important on the blog. Try to stick to your knitting!
: Paying over 7 mln $ to get rid of this monster of a woman shows how deeply Shell has sunk. She was a stealer of ideas. She was the ultimate token woman, a disgrace to her gender and it has put off many high quality women to pursue a career in Shell. Her disgusting behaviour of being the slave of Watts was evident to all. This latest scandal makes it clear she should never have been promoted to were she ended up. Another costly mistake of Shell. And the top echelon? They know no shame anymore and carry on with more spin stories as usual.
: Perhaps Voser will pull the same trick on Brinded as Watts did on v.d.Vijver. Watts announced that reserves would grow by 5% and that Walter would explain how.... The rest is history. I can only hope that history will repeat itself and Brinded finally gets fired for his gross underperformance and sustained bullshit. Perhaps I have said so before: never trust a man with facial hair.... I shall be watching the announcements how they will increase production with great interest.
: THE ARTICLE "Donovan email to Gavin White, Shell International Limited: 10 March 2010" has been updated with a self-explanatory email reply received on 11 March from Richard Wiseman, Chief Ethics & Compliance Officer, Royal Dutch Shell Plc.
: The Forbes article implies that by stopping sales of gasoline to Iran, Shell is complying with US sanctions. Shell's investments in the upstream sector in Iran are not mentioned, even though these are of far greater significance for both Shell and the Iranians.
: Amnesty International has been an informed and courageous critic of Human Rights abuses around the world for many decades and they are certainly not adverse to criticising governments in Nigeria, Burma, Zimbabwe and all around the world. The point about international companies like Shell is that they have a choice. They are not obliged to operate anywhere if they find that the local conditions are in conflict with their principles. Amnesty’s recent criticisms of Shell have certainly been strong and I am aware that in Shell there is a feeling that they have been unfair and to some extent uninformed. So a dialogue between Amnesty and Shell is very much to be welcomed. Amnesty is a highly respected organisation – indeed a former top executive of Shell, Sir Geoffrey Chandler, was a senior officer of Amnesty in his post Shell years.
: Same old, same old. Amnesty International and their human rights again go for the soft underbelly of the international companies rather than the real problem in Nigeia which is their corrupt Government. Good on Shell for attending and agrreing to being questioned. BUT, surprise, surprise nobody from the Nigerian Government (perhaps they didn't get enough of a bribe to appear or perhaps Amnesty knew they would get nowhere with them). Pollution in the Niger Delta remains a problem, albeit that conditions are slowly improving. Living conditions, infrastructure and most other normal day-to-day things should be the responsibility of the corrupt Government not international oil companies. These evil governments such as Nigeria, Zimbabwe and Burma need to be bought down by the UN so that their people might have a better chance of a reasonable life.
: Very polite correspondence between Wiseman and the Donovans. I estimate Wiseman's hourly internal tariff at around 500 U$ per hour (his salary plus support plus extensive overheads). Over the years Shell must have spent a fortune discussing the Donovans, putting the most expensive lawyers on the case, and developing policy how to battle them. It becomes Churchillian: 'we will fight them on the web, and in the courtrooms, and in their own offices and on the streets. But we wil NEVER surrender. With unlimited funds this maybe so, but it is wasting shareholders money and it solves nothing. I do not see the Donovans give up anytime soon. So perhaps a new paradigm needs to be developed? Any ordinary man or woman at the coalface would solve this problem within minutes and for less money than what is being burned now. But the Shell kings are no ordinary people, they live in cloud cuckoo land. I will keep following with great interest how all this develops, it is even better than the daily Dilbert!!!
: W.E. Pratt knew it already a hundred years ago when he said "Oil is found in the minds of men" But he was one of the founders of the Standard Oil company, whereas the people who try to make us believe that IBM can come to the rescue of Shell appear to be only good at getting rid of their most experienced minds.
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