Royal Dutch Shell Gears up for Largest U.S. Oil Refinery Capacity

Buy-recommended Royal Dutch Shell plc (RDS.A) offers currently estimated net present value [NPV] of $94 a share concentrated 51% on oil production, 33% on downstream refining/marketing and 14% on natural gas. Third quarter results reported today scored continued strength in oil and gas production while downstream profits were more modest after record refining margins in the previous quarter.

Cash flow capitalized at unlevered cash flow multiples (PV/Ebitda) related to reserve life (Adjusted R/P) supports estimated NPV. Future investments highlighted by Chief Financial Officer Peter Voser in the quarterly webcast included doubling of natural gas liquefaction capacity by 2010 compared to 2004.

Also, the company has launched a project to expand the Port Arthur, Texas refinery to the largest capacity in the U.S. at 600,000 barrels daily. The refinery expansion would be integrated with oil sands expansion in Canada pending the outcome of taxation issues. The trend in long-term oil price points to a positive outlook for Royal Dutch Shell stock

Originally published on October 25, 2007.