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BP and Shell downgraded by Santander

By John Donovan


19 September 2012

Under the headline “BP and Shell come under pressure” the Financial Times reports today that Santander has downgraded Royal Dutch Shell to “reduce” out of concern about Shell’s costs “as it tried to kick-start earnings growth” and other issues, apparently including the debacle in Alaska.

Extracts from Santander announcement:

While Shell remains resource-rich, it is light significant new projects, value, cash flow or earnings catalysts,” Santander said. “The company has also already peaked in terms of a core strategic goal: delivery of cash growth.”

Divestments and portfolio refocusing mean Shell will deliver the lowest growth of any European major through to 2017.

Attempts to improve the portfolio with exploration in Alaska and acquisitions in China and east Africa would create concern about diluting returns.

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