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Huge Changes Taking Place At Royal Dutch Shell Plc

Screen Shot 2013-12-22 at 19.09.52The FTSE 100 has risen 53% during the last five years, however, Royal Dutch Shell  one of the index’s largest constituents, has underperformed by a staggering 27%. And it’s not just Shell’s shares that have been underperforming. Indeed, according to the Financial Times, around one third of Shell’s assets, are not producing a positive return-on-investment. The assets dragging on Shell’s balance sheet include the company’s $8 billion share in the huge Kashagan oilfield, half of the company’s shale oil business within the United States (worth a total of $24 billion) and numerous downstream assets. Time to do some pruning…

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The FTSE 100 has risen 53% during the last five years, however, Royal Dutch Shell  one of the index’s largest constituents, has underperformed by a staggering 27%.

What’s more, compared to its larger peers, Exxon Mobil and Chevron, Shell’s shareholder returns have been less than impressive. In particular, aside from the company’s dividend yield, which is around the same as the industry average, since introducing a script dividend back during 2010 Shell has issued around $4 billion more stock than it has brought back.

It’s not just the company’s shares

And it’s not just Shell’s shares that have been underperforming. Indeed, according to the Financial Times, around one third of Shell’s assets, are not producing a positive return-on-investment. The assets dragging on Shell’s balance sheet include the company’s $8 billion share in the huge Kashagan oilfield, half of the company’s shale oil business within the United States (worth a total of $24 billion) and numerous downstream assets.

However, Shell’s new chief executive, Ben van Beurden is planning on making some changes, which look as if they will change the company for the better. For example, Mr Beurden has drawn up a plan to divest $15 billion worth of assets within the next few years. The idea is that these disposals will allow Shell to shed some inefficient assets, while using the cash raised to fund new projects.

As a matter of fact, the first wave of cuts has already started.

FULL ARTICLE

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