Royal Dutch Shell: A U-Turn In The Shale Business
Richard Zeits • 40 Comments
Richard Zeits • 40 Comments
Fri, Jul. 8, 10:57 AM
- Nigerian militants have launched a new round of attacks on oil pipelines belonging to Eni (E +1.4%) and others in the southern Niger Delta energy hub, the latest in a spate targeting the country's oil and gas facilities during recent months which earlier pushed oil production to 30-year lows.
- Niger Delta Avengers, the group that has carried out most of the attacks, says it blew up the Nembe 1, 2 and 3 trunkline, a 100 km long pipeline capable of carrying 600K bbl/day that moves Bonny Light crude oil to an export terminal; Royal Dutch Shell (RDS.A, RDS.B) sold the line to Italy's Aiteo last year but relies on it to get Bonny Light to international buyers.
- Eni says a separate attack on a crude pipeline in Bayelsa state had occurred; no group has claimed responsibility for that attack.
- Shell yesterday lifted its force majeure on Bonny Light that had been in place since early May; Eni's Brass River crude remains under force majeure declared after previous attacks, but it has been exporting crude oil even as the force majeure was in place.
Fri, Jul. 8, 7:49 AM
- Royal Dutch Shell (RDS.A, RDS.B) CEO Ben van Beurden has told investors that the U.K.'s decision to exit the European Union could slow its $30B asset sale plan, Reuters reports.
- Shell previously had targeted wrapping up the disposal of dozens of assets around the world by around 2018 to help fund its $54B acquisition of BG, which it completed in February, but the CEO reportedly told an investor event this week that the uncertainty following the Brexit vote would pose an obstacle for the program.
- Shell has in recent days put up for sale a package of oil and gas assets in the North Sea, including its stake in the lucrative Buzzard oilfield, hoping to raise at least $2B, according to the report.
Thu, Jul. 7, 8:28 AM
- Royal Dutch Shell (RDS.A, RDS.B) says it has lifted a force majeure on Bonny Light exports from Nigeria, following restoration of production into Bonny Terminal.
- Shell had declared the force majeure on Bonny Light exports on May 11 following the closure of the Nembe Creek Trunk line for repairs after a leak.
- Nigerian oil exports have been harmed in recent months because of an increase in terror attacks that also helped push crude oil prices past $50/bbl, but prices have retreated to ~$45/bbl as the attacks have subsided.
Tue, Jul. 5, 3:57 PM
- Chevron (CVX -0.6%) and Royal Dutch Shell (RDS.A, RDS.B) are the top picks among supermajor oil companies, while BP (BP -0.3%), Total (TOT -3.2%) and Exxon Mobil (XOM -1%) are less desirable, according to a new report from Tudor Pickering Holt.
- Tudor likes CVX for its high-margin growth, free cash flow turnaround from its Australian liquefied natural gas projects and its top quality Permian position, and appreciates Shell for its "safe dividend" and achievable asset sale program, which will help it reduce debt and ultimately re-initiate a stock buyback.
- The firm is only lukewarm on BP because of its stretched balance sheet, is concerned about TOT's project execution risk and lack of longer-term projects, and says XOM remains challenged in terms of future growth which should weigh on its premium valuation.
Tue, Jul. 5, 10:26 AM
- Royal Dutch Shell (RDS.A, RDS.B) has asked Saudi Aramco for as much as $2B as part of the breakup of their Motiva Enterprises refining joint venture in the U.S., Reuters reports.
- The split was announced in March and is expected to be completed in October but disagreements over the payment could postpone the final date, according to the report.
- Negotiations may prove difficult, as "the margin climate has shifted away from Shell towards Aramco in terms of any cash consideration that needs to be exchanged," says Neil Earnest of the Muse Stancil consultancy. "Aramco will be saying that the cash consideration today should be lower because the short and medium term outlook for U.S. refining margins is not as robust as it was."
- In the split, Aramco will take control of Motiva's largest U.S. refinery in Port Arthur, Tex., and retain 26 distribution terminals, while Shell will become the sole owner of Motiva's Louisiana refineries in Convent and Norco as well as Shell-branded gasoline stations in Florida, Louisiana and the northeastern U.S.
Fri, Jul. 1, 8:15 AM
- Chevron (NYSE:CVX) says it has suspended production at the Gorgon liquefied natural gas export facility in Australia after a leak but remains on track to make a second shipment in coming days.
- Traders cite news of the leak as a reason for a boost in Asian LNG prices to the highest level since February.
- The $54B project faced delays, cost overruns and labor unrest during construction, and in April temporarily halted production just two weeks after making its first shipment, citing a malfunction with the propane refrigerant circuit, used to cool gas supplied to the plant.
- Gorgon is a joint venture including operator CVX with a 47.3% stake, and Exxon Mobil (NYSE:XOM) and Royal Dutch Shell (RDS.A, RDS.B) with 25% each.
Thu, Jun. 30, 6:58 PM
- Exxon Mobil (NYSE:XOM) is ramping up its lobbying of other energy companies to support a carbon tax, marking a shift in its approach to climate change, WSJ reports.
- Top XOM officials have been more vocal about their support for a carbon tax and have met with D.C. officials and trade associations about related legislation, according to the report, citing the company’s recent lobby disclosure forms.
- "Exxon’s positioning on a carbon tax had been passive - ‘Hey, we’re not loving it, but we’re not going to get in the way of it,’” says Michael McKenna, president of energy lobbying firm MWR Strategies. “In just the last six months, there’s been an uptick in how they are asserting themselves in meetings about how to address this issue.”
- In actively pushing for a carbon tax behind the scenes, XOM would be the first major U.S. energy company to move closer to the positions of European energy firms such as BP and Shell (RDS.A, RDS.B) which have publicly advocated for a price on carbon.
Thu, Jun. 30, 1:13 PM
- Canadian oil and gas companies say they are not worried about the new North America-wide energy and climate change strategy announced yesterday by Canadian PM Trudeau, U.S. Pres. Obama and Mexican Pres. Nieto, which includes reducing methane gas emissions from the oil and gas industry by 40%-45%.
- The Canadian Association of Petroleum Producers says “having our competitors held to a similar standard is going to be good for all of us," since Canadian producers already are under pressure to cut methane emissions and pay carbon levies.
- TransCanada (NYSE:TRP) says it welcomed the agreement and cited its growing natural gas pipeline business in Mexico and its acquisition of Columbia Pipelines in the U.S. as evidence of the need for an interconnected energy system.
- The pact would force the three countries to add renewables, nuclear projects or carbon capture and storage projects on coal-fired power plants that would raise the total to 50% from the current 37%.
- Among other relevant tickers: SU, ECA, ENB, CVE, CNQ, OTCPK:HUSKF, IMO, XOM, COP, PDS, CEO, RDS.A, RDS.B
Thu, Jun. 30, 12:47 PM
- Exxon Mobil (XOM +0.8%), Chevron (CVX +1.2%) and Tesoro (TSO -0.5%) are among refiners being investigated by California's attorney general over allegations they withheld supply in an attempt to artificially raise gasoline prices in the state, WSJ reports.
- The subpoenas were sent in late May and seek information about trading, maintenance and repair activities at the companies since 2014, according to the report.
- Other companies receiving subpoenas reportedly also included Phillips 66 (PSX -0.9%), Valero (VLO -2.1%) and Royal Dutch Shell (RDS.A, RDS.B).
- "Many factors that determine the price of gasoline," a TSO spokesperson says, including "the cost of crude oil, distribution and marketing costs, refining costs and federal and state taxes. Market conditions, such as supply and demand, determine the price that consumers pay at the pump.”
Wed, Jun. 29, 10:59 AM
- Royal Dutch Shell (RDS.A, RDS.B) has been selected by Indonesia's Pertamina to process 1M barrels/month of Iraqi crude at a Singapore refinery, a senior official at the state-owned company tells Reuters.
- The Shell deal is expected to be formalized in the coming weeks and will initially run for the six months from July to December, the official says.
- An estimated 900K barrels/month of gasoline for import will be produced from the Singapore refinery.
- Separately, Indonesian Pres. Widodo orders an expansion of offshore oil exploration and commercial fishing in the waters near the Natuna Islands, as it seeks to assert sovereignty over the area in the South China Sea.
Tue, Jun. 28, 11:58 AM
- A Canadian government study yields a surprising result about what happens to oil sands crude in a freshwater spill: it floats, at least for a while, sinking more slowly than conventional oil, unless exposed to high temperatures and weathering.
- The results may help dispel some concern that a spill of diluted bitumen would be more difficult to clean up, and help companies make the case for pipeline projects such as Kinder Morgan’s (KMI +0.9%) Trans Mountain expansion and Enbridge’s (ENB -0.1%) Northern Gateway pipeline.
- The study follows a 2015 report by the U.S. National Academy of Science that showed diluted bitumen tended to sink quickly after being spilled in fresh water.
- Among other relevant tickers: SU, ECA, CVE, CNQ, TRP, OTCPK:HUSKF, IMO, XOM, COP, PDS, CEO, RDS.A, RDS.B
Mon, Jun. 27, 3:04 PM
- Total (TOT -2.4%) has won a 30% stake in a new contract to operate Qatar's al-Shaheen offshore oil field, which currently produces ~300K bbl/day, Reuters reports.
- Six global oil companies including BP and Royal Dutch Shell (RDS.A, RDS.B) placed bids to operate the field formerly run by Maersk Oil, according to the report.
- Moller Maersk (OTCPK:AMKAF, OTCPK:AMKBF) says its 2016 financial outlook remains unaffected with no need for writedowns as a result of losing the tender process to TOT.
- For TOT, winning the Al-Shaheen stake is its second major upstream development deal with a Gulf oil producer during 2015-16 after renewing a 40-year onshore concession in Abu Dhabi in January 2015.
Mon, Jun. 27, 11:59 AM
- The Dutch government said on Friday it would lower the cap on production at the Groningen gas field to 24B cm/year for the next five years, following a recommendation by the Dutch National Mines Inspectorate.
- The Dutch economic affairs minister says the state expects to lose €345M/year ($380M) in revenues because of the new cap, but analysts say the reduction from 27B cm/year is close to what was expected and "may even provide some relief to markets that may have anticipated a prolonged decline to 2020."
- The Inspectorate says earthquakes have been decreasing in frequency and intensity in Groningen since the government began reducing production from 42.5B cm in the peak production year of 2014; the field is operated by NAM, a joint venture between Royal Dutch Shell (RDS.A, RDS.B) and Exxon Mobil (NYSE:XOM).
Mon, Jun. 27, 7:02 AM
Sat, Jun. 25, 8:25 AM
- The U.S. currently pumps ~8.7M bbl/day of crude oil, 480K less than at the end of 2015, but more than 500K bbl/day of new crude from the Gulf of Mexico is set to come online this year and next, WSJ reports, threatening to prolong the oil glut and hold down prices.
- One reason is a handful of massive oil fields sanctioned for development years ago by companies such as BP and Freeport McMoRan (NYSE:FCX) that will start pumping later this year, but another is that companies have found that smaller satellite fields can be tapped inexpensively by tieback wells linked to existing offshore oil platforms via underwater pipelines.
- Exxon (NYSE:XOM) this year began pumping from the tieback Julia offshore well, with production piped back to a Chevron (NYSE:CVX) platform; CVX also recently executed a tieback that will produce 50% more oil and gas than it originally expected.
- Noble Energy (NYSE:NBL) nearly doubled its Gulf output in Q1 and has another well starting to pump later this summer; Anadarko (NYSE:APC) has more than 30 tieback well prospects in satellite fields, and will drill up to seven this year.
- Companies also are getting better at accessing deepwater finds; Shell (RDS.A, RDS.B) saved $1B drilling its Stones project, which will start up later this year, by using a slim-well design offshore engineers borrowed from onshore shale operations.
Fri, Jun. 24, 12:52 PM
- After plunging immediately following the Brexit vote, U.K. energy giants BP (BP -5%) and Royal Dutch Shell (RDS.B -8.5%) have rebounded on a dollar basis, WSJ reports, with BP shares up 2.6% on a dollar basis and Shell’s Class B shares up 1.4% on a dollar basis.
- Analysts at Tudor Pickering Holt say the reason for the move is that many of the U.K.-based companies’ costs are billed in the plummeting pound, while their revenues are largely paid in dollars; the currency swings also have bumped the dividend yield at BP to 7.6% and Shell to 7.5% "with no change at all in their abilities to fund the dividends."
- The early selloff was “probably an unfair reaction” given that both companies operate globally, the firm says, adding that “clearly there will be short term volatility, but for those taking a long term view we see this as an attractive buying opportunity."
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 are engaged in exploring for and recovering... More
Sector: Basic Materials
Industry: Major Integrated Oil & Gas
Country: United Kingdom