Investors happy with Shell's new path to cut spending, exit Arctic


Investors generally cheer Royal Dutch Shell's (RDS.A, RDS.B) plans to put its Arctic oil drilling on ice after already spending nearly $5B to drill there.

"This is a good start, they're saying the right things, more loudly and more quantified than we had expected," RBC analyst Peter Hutton says, adding that the 4% dividend increase was "confident" and ahead of expectations.

CEO Ben Van Beurden's strategy is what the market wanted to hear, according to Investec's Neill Morton, who expects further writedowns of Shell's North American shale assets.

"Like the mining sector, capital discipline has been lacking at the major oil groups and there is pressure from shareholders to cut back investment to improve cash flows. Shell appears to be listening," says Charles Stanley's Garry White.

It will take at least a year to know if Shell is prepared to write off its Arctic spending and walk away completely.

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Comments (3)
  • smurf
    , contributor
    Comments (6147) | Send Message
     
    As a shareholder, I'm glad to see them retrench. Hope they continue to do so in the corrupt and dangerous banana republic areas.
    30 Jan 2014, 03:29 PM Reply Like
  • howardsil
    , contributor
    Comments (7) | Send Message
     
    The Arctic venture was too dangerous to begin with. The probability of an accident with unlimited environmental damage was very high and not worth the risk reward. A sound business decision.
    30 Jan 2014, 05:13 PM Reply Like
  • TheJollyGreenMan
    , contributor
    Comments (103) | Send Message
     
    With a mini ice-age looming, even if it just an extended cooler period of a couple of decades, like the 1950s and 1960s, this is very sensible thing to do.

     

    I am hanging onto my RDS.Bs.
    30 Jan 2014, 06:21 PM Reply Like
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