Royal Dutch Shell: A U-Turn In The Shale Business
Richard Zeits • 40 Comments
Richard Zeits • 40 Comments
Mon, May 9, 3:19 PM
- Crude oil prices erased all of Friday's gains and more, as June futures ended the pit session 2.7% lower to $43.55/barrel even as the massive wildfires in the heart of Canada's oil sands continue to spread, albeit more slowly.
- But positioning in the oil market is very stretched, and analysts say speculators already hold the largest number of wagers for a rise in WTI futures since last summer and near-record high bullish bets on Brent, so the scope for further gains was limited without more clarity on the extent of damage to oil facilities or supply outages.
- The sacking of Ali al-Naimi as head of Saudi Arabia’s oil ministry also may be a reason why oil prices failed to maintain early gains, as successor Khalid al-Falih, the former head of Aramco, is expected to follow the strategy of protecting the country’s market share.
- Yesterday, Cnooc’s Nexen (NYSE:CEO) operations to the south of Fort McMurray reportedly suffered minor damage, while Suncor (NYSE:SU) says its facilities have not been damaged and is beginning to implement a plan for a return to operations.
- Other relevant tickers: RDS.A, RDS.B, XOM, IMO, COP, OTCPK:HUSKF, OTCPK:ATHOF, CNQ, CVE, OTCPK:MEGEF, ENB, OTCPK:IPPLF, OTC:KEYUF, TRP, PSX, STO
- ETFs: USO, OIL, UWTI, UCO, DWTI, SCO, BNO, DBO, DTO, UGA, USL, DNO, OLO, UHN, SZO, OLEM
- Now read Fort McMurray situation getting better - oil markets daily
Mon, May 9, 10:59 AM
- Royal Dutch Shell (RDS.A, RDS.B) reportedly has evacuated non-essential staff from its Eja oil field offshore Nigeria amid mounting terrorism in the country’s oil-rich Niger Delta region.
- The Niger Delta Avengers terror group, which last week took credit for knocking out pipelines controlled by Chevron and the Nigerian National Petroleum Corp., reportedly forced the Shell evacuation.
Sat, May 7, 12:32 AM
- The devastating wildfires in and around Alberta's Fort McMurray may double in size to 2K sq. km over the weekend and burn for weeks, officials say.
- Bank of Montreal has cut its Q2 Canadian GDP growth estimate to zero from 1.5%, citing “severe disruptions to oil production” due to the fires, and said the estimate was just a placeholder dependent on more information on the scope of the disaster.
- Royal Bank of Canada estimates that as much as 1M bbls/day of production has been shut, or ~40% of oil sands output, as companies including Suncor (NYSE:SU), Shell (RDS.A, RDS.B), Exxon (NYSE:XOM) subsidiary Imperial Oil (NYSEMKT:IMO), ConocoPhillips (NYSE:COP), Husky Energy (OTCPK:HUSKF) and Athabasca Oil (OTCPK:ATHOF) cut production.
- The fire is said to be “at the gates” of Nexen’s (NYSE:CEO) Long Lake project, but a few companies including Canadian Natural Resources (NYSE:CNQ), Cenovus (NYSE:CVE) and MEG Energy (OTCPK:MEGEF) say their production has been unaffected so far.
- Among pipeline companies, no assets have incurred significant damage, but Enbridge (NYSE:ENB) shut all pipelines in and out of Cheecham Terminal, Inter Pipeline (OTCPK:IPPLF) shut parts of its system in the province, and Keyera's (OTC:KEYUF) South Cheecham rail and truck terminal is shut down; TransCanada (NYSE:TRP) says it does not expect the fires to affect deliveries of natural gas.
- SU, Phillips 66 (NYSE:PSX) and Statoil (NYSE:STO) have declared force majeure on supplies from the region.
Fri, May 6, 5:03 PM
- The U.S. increasingly views the Nord Stream-2 gas pipeline project, which would double the volume of gas shipped directly from Russia to Germany, as a threat to national security, according to a senior U.S. energy envoy.
- Many European Union governments complain that the project increases dependency on Russia, which supplies around a third of the EU's gas.
- The Nord Stream-2 consortium, which includes Gazprom (OTCPK:OGZPY), E.ON (OTCQX:EONGY), Royal Dutch Shell (RDS.A, RDS.B), Engie (OTCPK:ENGIY) and others, says the project is purely commercial and that Russian pipeline gas is cheaper than liquefied natural gas.
- The envoy - at a meeting in Washington this week of the U.S.-EU energy council - dismisses the argument, saying it does not make commercial sense for Europe to "double down on physical infrastructure that is not accessible to new markets."
Thu, May 5, 6:59 PM
- Royal Dutch Shell (RDS.A, RDS.B) has cast further doubt that its LNG Canada export project in British Columbia will secure a final investment decision by the end of this year.
- The project in Kitimat is competing for funding dollars with two Shell liquefied natural gas projects in the U.S., plus a chemicals plant in Pennsylvania, within the next 12 months, although the company has “not yet pulled the trigger on it one way or the other," CFO Simon Henry told investors during a yesterday's earnings conference call.
- Shell is cutting spending to $30B this year from $35B in 2015, and analysts tell Financial Post that it will be tough for it to reach a decision by year-end.
- Now read TransCanada wins final two permits for Coastal GasLink pipeline project
Thu, May 5, 6:38 PM
- Alberta's raging wildfire has caused Canadian crude oil output to drop by at least 475K bbl/day, or nearly 20% of Canada's 2.5M barrels in total oil sands production - much of it typically sent to U.S. refineries.
- While no oil operations have sustained damage from the fires, many operators have cut output amid evacuations of non-essential staff, pipeline outages and the risk from encroaching fire.
- The amount of daily oil production threatened by the Canadian fires would be enough to nearly wipe out the world's oversupply, says Tim Pickering of Auspice Capital Advisors, calling the blaze "the most important issue in oil today."
- The Bank of Nova Scotia says the destruction of property and loss of production could mean "very little" GDP growth during Q2 for the overall Canadian economy and that the damage to infrastructure will slow the recovery in the country's oil patch.
- In the latest of a series of plant closures, ConocoPhillips (NYSE:COP) today shut down its Surmont oil sands site that produces 50K bbl/day and evacuated all staff, and Suncor (NYSE:SU) cut output at its 350K bbl/day Syncrude mining operation and its 203K bbl/day Firebag well site without specifying how much.
- Other relevant tickers include: RDS.A, RDS.B, IMO, XOM, CNQ, ENB, PBA, CEO, OTCPK:HUSKF, OTCPK:IPPLF.
- ETFs: USO, OIL, UWTI, UCO, DWTI, SCO, BNO, DBO, DTO, USL, DNO, OLO, SZO, OLEM
Thu, May 5, 5:28 PM
- TransCanada (NYSE:TRP) says it has secured the final two permits needed from British Columbia regulators to begin construction and operation of its proposed Coastal GasLink pipeline project.
- TRP also says it has approvals from 11 First Nations communities along the length of the proposed pipeline route, and that progress is being made with remaining groups.
- The $4.8B 650-km pipeline would link natural gas fields in northeastern British Columbia the proposed LNG Canada liquefied natural gas export facility in Kitimat, B.C.
- The LNG Canada consortium, led by Royal Dutch Shell (RDS.A, RDS.B), is expected to make a final investment decision on the project late in 2016, and if approved, TRP could start pipeline construction next year.
- Now read TransCanada: A long-term growth opportunity
Wed, May 4, 11:18 PM
- The huge wildfire (I, II) that already has forced more than 80K people to flee their homes in and around Fort McMurray and disrupted oil sands operations in Alberta reportedly is set to expand.
- Wildfire officials say the blaze probably will grow to 100 sq. km (40 sq. miles) from ~80 now, and that although lower temperatures may aid firefighters tomorrow, the fire is expected to last at least until the weekend.
- WTI crude oil prices have jumped past $45/bbl overnight as the fire disrupts oil sands production.
- Alberta oil sands producers are not yet in the fire's path but have cut or halted operations because of evacuations: Royal Dutch Shell’s (RDS.A, RDS.B) Canadian unit shut its Albian Sands mining operations which produce ~255K bbl/day, Suncor (NYSE:SU) cut production at all of its oil sands sites, Inter Pipeline (OTCPK:IPPLF) partially closed its 540K bbl/day Polaris pipeline system and its 346K bbl/day Corridor system, Husky Energy (OTCPK:HUSKF) cut output at its Sunrise oil sands plant by two-thirds to 10K bbl/day, Exxon’s (NYSE:XOM) Imperial Oil (NYSEMKT:IMO) Canadian unit says production has not yet been affected, and operations by Enbridge (NYSE:ENB), Pembina Pipeline (NYSE:PBA) and Canadian Natural Resources (NYSE:CNQ) apparently have not been affected.
- The inferno is shaping up to be worse than the Slave Lake fire of 2011, one of the most costly natural disasters in Canada’s history, and is a severe blow to an area already devastated by job losses stemming from low energy prices.
Wed, May 4, 11:16 AM
- Nick Tiller of Precocity Capital is long Royal Dutch Shell (RDS.A, [[RDS.B), noting its 7% yield at current prices. The dividend is sustainable, he says, as the company can borrow in Europe at negative interest rates.
- Synergies from the BG acquisition will be greater than the guided-for $35B. Capex is coming down and production is going up, and a massive inflection is due to take place which will take free cash flow per share from its current $8 to $25 by 2020.
Wed, May 4, 10:18 AM
- Royal Dutch Shell (RDS.A, RDS.B) says it has shut down its Albian Sands mining operations in Alberta following the huge wildfire that forced evacuation of tens of thousands people from Fort McMurray and the surrounding area.
- "While our operations are currently far from the fires, we have shut down production at our Shell Albian Sands mining operations so we can focus on getting families out of the region,” the company says.
- Suncor Energy (NYSE:SU) earlier said it was reducing output at its facilities in the region to allow workers and their families to get to safety; SU says its plant is ~16 miles north of Fort McMurray and is in a safe condition.
- Nexen, the Cnooc (NYSE:CEO) subsidiary whose Long Lake oil sands project is close to Fort McMurray, says it is working on a modified staffing plan to manage the situation.
Wed, May 4, 8:58 AM
- Royal Dutch Shell (RDS.A, RDS.B) -1.9% premarket after saying it cut its 2016 spending plans by another 10% from the target set in February when it completed the acquisition of BG Group, and will cut even further if needed.
- In the first quarterly results since completing the BG deal, Shell reported better than expected Q1 earnings, as lower costs helped offset the impact of weaker oil and gas prices and an increase in operating expenses associated with BG.
- Shell now says it expects to spend $30B this year, cutting $3B from previous guidance as it cancels projects such as the sour gas project in Abu Dhabi, and sees full-year operating expenses for the combined company at $40B, down from $53B in 2014; the dividend is maintained at $0.47.
- The BG addition also helped raise the company's production volumes by 16% Y/Y in the quarter to 3.7M boe/day.
- Shell says its quarterly profit on a current cost-of-supplies basis totaled $1.55B, 58% below the 3.7B in the year-ago quarter but beating the $1.04B analyst consensus.
- Shell also warns that low oil and gas prices, significant maintenance at production sites as well as "substantial redundancy and restructuring charges" will impact Q2 earnings.
Wed, May 4, 7:30 AM
- More than 60K residents of the Canadian oil city of Fort McMurray evacuated overnight as authorities battled an out-of-control wildfire.
- Authorities say the worst of the fire is not over, as the dangerous conditions that sparked the blaze - high temperatures, low humidity and high winds - are expected to continue today.
- Suncor Energy (NYSE:SU) said late last night that it was “reducing production” at all of its oil sands operations in the region; the company, which produces 453K bbl/day from its oil sands sites in northern Alberta, did not quantify the volume or timeline for the reduced output.
- Other major oil sands producers, such as Exxon Mobil (NYSE:XOM) subsidiary Imperial Oil (NYSEMKT:IMO), Royal Dutch Shell (RDS.A, RDS.B) and Canadian Natural Resources (NYSE:CNQ), said their operations have not been affected but are monitoring events.
Wed, May 4, 5:57 AM
Wed, May 4, 5:28 AM
Wed, May 4, 3:42 AM
- Royal Dutch Shell's (RDS.A, RDS.B) CCS (Current Cost of Supplies) earnings per share, excluding identified items, decreased 63% to $1.6B, as the tumble in oil prices continued to take its toll.
- Unfavorable currency effects and a weak Brazil market weighed on AB InBev's (NYSE:BUD) net profit, but the brewer said it expects to close its SABMiller (OTCPK:SBMRY) deal in the second half of 2016.
- Siemens (OTCPK:SIEGY) powered ahead with better than expected second-quarter profits, boosted by earnings growth at its power, gas and energy-management divisions.
Tue, May 3, 5:30 PM
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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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