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Future Bright For BP and Royal Dutch Shell Shareholders?

Extracts from an article by Rupert Hargreaves published on 4 March 2014 by The Motley Fool

Screen Shot 2013-12-22 at 19.09.52One of the problems that these oil majors face is the sheer size of their operations, making it hard to keep track of everything. In particular, it has been estimated that up to 30% of Shell’s assets are not currently generating a return on investment. Further, Shell is having a problem with free cash flow, which is not growing nearly as quickly as management said it would. The company said in 2012 that it would generate $200bn of operating cash flow over the ensuing four years, so far it has only realised about $40bn a year. Shell has been divesting assets left, right and centre, with $15bn of asset sales planned, although this figure could double.

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