Royal Dutch Shell: A U-Turn In The Shale Business
Richard Zeits • 40 Comments
Richard Zeits • 40 Comments
Wed, Jun. 22, 8:35 AM
- A Dutch advisory body has advised the government to make further production cuts at the Groningen gas field to reduce the risk of earthquakes in the area.
- The agency says the government should cap production at 24B cm/year of gas, after several cuts in the past year have left the rate at 27B cm/year; Groningen gas has supplied nearly 10% of demand in the European Union
- A final decision by the Dutch Cabinet will be based on recommendations from the agency, Groningen's operator NAM, a joint venture of Royal Dutch Shell (RDS.A, RDS.B) and Exxon Mobil (NYSE:XOM), and six other parties.
Mon, Jun. 20, 2:45 PM
- The head of Royal Dutch Shell's (RDS.A, RDS.B) unconventionals business, Greg Guidry, tells Reuters that the shale division has turned around, and the drive to cut costs and streamline decision-making had put the business largely on a par with leading rivals in terms of productivity and efficiency.
- Guidry also says Shell plans to make small acquisitions near its existing North American shale areas, mostly from producers struggling in the current industry downturn, and hopes to launch an early production well this year in Argentina's Vaca Muerta, considered the world's no. 2 shale resource after North America.
- Such moves would mark a change of fortunes for Shell's shale business, with Shell CEO Ben van Beurden saying as recently as late last year that the company was considering shedding the business due to concerns it would drag down overall profitability after the group's $54B acquisition of BG Group.
Mon, Jun. 20, 10:52 AM
- Russia's Gazprom (OTCPK:OGZPY) could gain control over some assets that Royal Dutch Shell (RDS.A, RDS.B) acquired earlier this year from BG Group, deputy chief executive Alexander Medvedev tells Reuters.
- Medvedev does not say what the BG holdings were or where they were located, but that the deals would be completed by year-end or perhaps earlier.
- Shell signed a deal with Gazprom last week to study jointly building a $10B gas plant on the Baltic Sea, as part of their strategic partnership which also foresees asset swaps.
Fri, Jun. 17, 10:21 AM
- Chevron (CVX +0.2%) is looking for potential buyers for its Burnaby, B.C., refinery and gasoline stations, and Royal Dutch Shell (RDS.A, RDS.B) is soliciting interest in its Martinez, Calif., refinery, as they look to trim lower-margin assets, Reuters reports.
- CVX says it is testing the market for any interested buyers in the 55K bbl/day refinery, which may prove to be a better fit for a smaller buyer that focuses on a particular region or a company that concentrates on storage and trading but not oil production; Burnaby refines light oil, rather than heavy crude from Canada's oil sands, and its products are distributed in a smaller region around B.C. and into Washington state.
- Refining profit margins have dropped from 2015 highs and the fear is that as crude prices recover, refiners will be squeezed as the cost of oil rises but the price of gasoline does not keep pace, and selling the plants while margins are still reasonably high allows for an exit without balance sheet damage.
Thu, Jun. 16, 11:16 AM
- Royal Dutch Shell (RDS.A, RDS.B) and Gazprom (OTCPK:OGZPY) have signed a letter of understanding to begin construction of a liquefied natural gas project at the Russian port of Ust-Luga on the Baltic Sea, confirming earlier reports.
- Respective CEOs Ben van Beurden and Alexei Miller signed the agreement at the International Economic Forum in St. Petersburg.
- Gazprom has said the Baltic LNG plant could produce up to 20M metric tons/year of frozen gas, with an option to expand to 15M metric tons; the new plant will start operating in December 2021.
- UPDATE: Russia's energy minister says Shell and Gazprom will jointly invest $13B in three projects.
Wed, Jun. 15, 2:48 PM
- Royal Dutch Shell (RDS.A, RDS.B) CEO Ben van Beurden says he wants to surpass Exxon Mobil to become the best-performing oil major, and while Shell has closed the gap in total shareholder returns after lagging behind for five years, it trails its U.S. rival on several other metrics from return on capital and assets to cash flow.
- Analysts are split on the feasibility of van Beurden's goal, with Brewin Dolphin's Iain Armstrong saying “it could take years for Shell to become the benchmark for the industry that Exxon is,” while Macquarie's Iain Reid thinks "they’ve got a good chance if they can change the business in the way they outlined last week.”
- For the first 90 years of its existence, Shell led the industry in total shareholder returns through the first 90 years of its existence, van Beurden says, but it lost that position in the late 1990s as rivals made major acquisitions and Shell did not; the CEO now is banking on the purchase of BG to return the company to the top.
- Separately, BMO Capital upgrades shares to Outperform from Market Perform, citing what it sees as "positive messaging around capex and free cash flow."
Wed, Jun. 15, 7:34 AM| Wed, Jun. 15, 7:34 AM | 2 Comments
Tue, Jun. 14, 11:58 AM
- Royal Dutch Shell (RDS.A, RDS.B) is expected to sign a deal with Gazprom (OTCPK:OGZPY) this week for a planned liquefied natural gas project at the Baltic Sea, possibly to acquire a 25%-35% stake, Reuters reports.
- A Russian government official says the deal will be signed in the presence of Pres. Putin, who will meet Shell CEO Ben van Beurden at the St. Petersburg International Economic Forum.
- Gazprom plans to build the plant, which may produce up to 20M metric tons/year of LNG, by December 2021.
Mon, Jun. 13, 11:59 AM
- The head of natural gas at Royal Dutch Shell (RDS.A, RDS.B) says the world is not yet oversupplied with liquefied natural gas, and suggests the proof may be found in Europe, where natural gas demand gained last year and LNG imports from overseas were little changed.
- The absence of more Europe-bound shipments is a testament to the “genuine LNG buyers” mopping up new LNG supplies from exporters including the U.S. and Australia, Maarten Wetselaar says, adding that emerging markets and increasing demand from countries including India, Egypt and Pakistan are helping keep a glut at bay.
- While the world may not be dealing with a glut, Wetselaar says the U.S. gas market will continue to be plagued by “really low” prices for decades, as “you have a very large inventory of gas that can be produced at sort of below $4-$4.50” per million Btus.
- ETFs: UNG, UGAZ, DGAZ, BOIL, GAZ, KOLD, UNL, DCNG
Thu, Jun. 9, 5:26 PM
- Nigeria's Trans Niger Pipeline, one of two major pipelines that carries the Bonny Light crude grade for export, was shut down yesterday after a leak was found, Upstream reports.
- Royal Dutch Shell (RDS.A, RDS.B), one of TNP's partners, confirmed that the pipeline had shut down but declined to comment further; the other partners are Total (NYSE:TOT), Eni (NYSE:E) and Nigerian National Petroleum Corp.
- The shutdown comes just as repairs were completed on the Nembe Creek Trunk Line that also moves Nigeria's major export grade.
- Meanwhile, Nigeria reports that its March crude oil production fell to just above 1.8M bbl/day, its lowest monthly level in at least a year and down more than 3% from February's 2M-plus bbl/day; Angola has now surpassed Nigeria as Africa’s largest crude oil exporter.
Thu, Jun. 9, 10:39 AM
- Repsol (OTCQX:REPYF, OTCQX:REPYY) says it has abandoned 55 of its 93 oil and gas leases in the Chukchi Sea offshore Alaska and plans to abandon the remaining 38 over the next year.
- Repsol's decision means that Royal Dutch Shell (RDS.A, RDS.B) will hold the only active lease remaining in the Chukchi.
- Repsol says it also will re-evaluate the value of its leases in the Beaufort Sea, where it jointly owns 22 leases with Eni and Shell and another seven leases with just Eni.
Wed, Jun. 8, 4:59 PM
- The Gazprom-led (OTCPK:OGZPY) consortium has issued the first major tender for its $11B Nord Stream-2 natural gas pipeline project, which could double supplies of Russian pipeline gas across the Baltic Sea to Western Europe, WSJ reports.
- The estimated $1B-plus tender for the pipe-laying contract has been sent to interested contractors, and bids will be evaluated by the consortium on June 13, according to the report.
- The JV building the project is 51% owned by Gazprom, while Royal Dutch Shell (RDS.A, RDS.B), E.ON (OTCQX:EONGY), OMV (OTC:OMVJF) and BASF/Wintershall (OTCQX:BASFY) each own 10% and Engie (OTCPK:ENGIY) has a 9% stake.
- The existing Nord Stream pipeline has been criticized because it allows Russia to circumvent transit countries, such as Ukraine and Poland; the European Union is skeptical about the new project on antitrust grounds because Gazprom would own all the gas to be transported through the infrastructure.
Wed, Jun. 8, 4:47 PM
- Royal Dutch Shell (RDS.A, RDS.B) is donating some controversial Arctic energy exploration permits to the Nature Conservancy of Canada, clearing the way for creating Canada’s third national marine protected area.
- The permits cover 8,600 sq. km north of Baffin Island at the eastern gate of the Northwest Passage, including Lancaster Sound, a rich area of Baffin Bay that is home to belugas, narwhals, seals, walrus and many other Arctic animals.
- The 30 legally questionable permits had been challenged in a lawsuit claiming the permits, purchased in the 1970s, were never renewed and have lapsed, a position that has found support among legal scholars.
- Shell critics say the donation is merely an "attempt to score some brownie points and exit from the scene gracefully, rather than have the permits pried from their hands by force."
Wed, Jun. 8, 2:33 PM
- Royal Dutch Shell (RDS.A, RDS.B) has resumed purchases of Iranian crude oil, becoming the second major oil firm after Total to restart trade with the country after the lifting of sanctions, Reuters reports, citing trading sources and ship tracking data.
- Shell reportedly fixed Suezmax tanker Delta Hellas to bring 130K metric tons of Iranian crude from Kharg Island on July 8 to continental Europe.
- Shell has been mending fences with Iran for some time, and earlier this year repaid its outstanding debt to Iran's national oil company from pre-sanction times.
Wed, Jun. 8, 11:58 AM
- Royal Dutch Shell (RDS.A +2.2%) is higher after Evercore ISI upgrades shares to Buy from Hold with a $64 price target, applauding the company's decision to embrace a strategy that values shareholder returns over growth.
- Evercore says Shell's previous "growth at the expense of returns" approach caused the company's return on capital employed and its economic value added fell 75% over the past decade or so, and the firm believes investors will assign the stock a higher valuation if Shell can successfully carry out the new strategy.
- The firm says the change differentiates Shell from its supermajor peers, adding that while value creation is harder to achieve, accountability, organizational effectiveness and shareholder value stand to increase considerably.
Tue, Jun. 7, 6:36 PM
- Royal Dutch Shell (RDS.A, RDS.B) says it will not attempt to repair the Forcados export pipeline in Nigeria for now after terrorists attacked it a second time last week, fearing for the safety of repair crews.
- Shell’s resignation over the disabled pipeline suggests a new level of insecurity amid the latest violence at the oil-rich Niger Delta; in the past, energy companies usually were able to repair pipelines after attacks.
- The Forcados, Brass River and Bonny Light export terminals in Nigeria are under force majeure, the Escravos terminal is delaying shipments after attacks against facilities operated by Chevron, while a force majeure for Quao Iboe was lifted last week after Exxon carried out repairs.
Royal Dutch Shell Plc engages in the oil and natural gas production. It operates through three segments: Upstream, Downstream, and Corporate. The Upstream segment combines the operating segments Upstream International and Upstream Americas, which have similar characteristics and are engaged in... More
Sector: Basic Materials
Industry: Major Integrated Oil & Gas
Country: United Kingdom
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