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Royal Dutch Shell plc (RDS.A)

  • Oct. 27, 2014, 5:39 PM
    • Royal Dutch Shell (RDS.A, RDS.B) is asking the Obama administration for five more years to explore for oil off Alaska’s coast, in effect extending the deadline to drill on its Beaufort and Chukchi leases, saying setbacks and legal delays may push the start of drilling past the 2017 expiration of some leases.
    • Shell, which has spent eight years and $6B to explore in the Alaskan Arctic, said in a July letter to the Interior Department that prudent exploration before leases expire is now “severely challenged."
    • Shell’s plans to drill in the Arctic were set back in late 2012 by mishaps involving a drilling rig and spill containment system, then the company halted maritime operations there to repair equipment and has not resumed.
    • Leases issued by the U.S. government for the right to drill for oil in the Arctic expire in 10 years unless the holder can show significant progress toward development.
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  • Oct. 22, 2014, 7:53 AM
    • Royal Dutch Shell (RDS.A, RDS.B) says it found a gas field under a layer of salt in deep water off the coast of Gabon, in a discovery which could help confirm hopes that parts of west Africa's geology are similar to Brazil's.
    • The Leopard-1 well encountered a substantial gas column, with ~200 meters net gas pay in a pre-salt reservoir, and Shell now plans an appraisal program to further determine resource volumes.
    • Shell is the operator of the well with a 75% interest, while Cnooc (NYSE:CEO) owns the remaining 25%.
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  • Oct. 21, 2014, 5:25 PM
    • The British Columbia government says it is reducing its proposed liquefied natural gas tax, essentially cutting it in half, to entice global energy companies to move forward with their projects in the province.
    • B.C. also unveils a special credit that allows LNG companies to reduce their corporate tax rate, as an incentive for the companies to locate at least some of their offices in the province.
    • The LNG tax has now been reduced to 3.5%, and would only move to 5% in 2037; while the B.C. government still stands to gain nearly $150M/year in LNG taxes for each plant, the full amount will not be collected until seven years after a plant begins operating.
    • Shell-led (RDS.A, RDS.B) LNG Canada issued a statement that appeared supportive of the government tax structure, while Petronas-led Pacific Northwest LNG is more cautious in its reaction.
    • The "flurry of LNG proposals this year from Washington D.C. has totally freaked out B.C. and got the wheel turning," Gregor Macdonald tweets.
    • Earlier: B.C. to require world's lowest LNG emissions.
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  • Oct. 21, 2014, 11:59 AM
    • Royal Dutch Shell (RDS.A, RDS.B) says it has signed agreements to sell all the Nigerian oil assets it put up for sale last year, as it continues to reduce its exposure to the area amid violence and rampant oil theft.
    • Shell says that, together with its partners Total (NYSE:TOT) and Eni (NYSE:E), it signed an agreement to sell OML 18 to a consortium led by Canadian oil and gas company Mart Resources (OTCPK:MAUXF); it has now made sale and purchase agreements for four oil blocks, and made an agreement for the Nembe Creek Trunk Line pipeline.
    • Shell also reportedly has agreed to sell another productive Nigerian oil block, Oil Mining License 29, and an associated pipeline, to a local consortium.
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  • Oct. 20, 2014, 6:56 PM
    • British Columbia will require proponents of liquefied natural gas terminals to keep their carbon emissions at the lowest level in the world, not to exceed the equivalent of 0.16 metric ton of carbon dioxide per ton of LNG, the province's Environment Ministry says.
    • The lower carbon stipulation for LNG plants would add to an existing levy on greenhouse gases in B.C., which has a target to reduce emissions by a third below 2007 levels by 2020.
    • Legislation regarding an LNG-specific tax - long awaited by major players such as Petronas, Shell (RDS.A, RDS.B) and Chevron (NYSE:CVX), who are proposing as many as 18 projects to ship LNG from the province to meet Asian demand - is scheduled to be announced tomorrow.
  • Oct. 20, 2014, 9:56 AM
    • Shell Midstream Partners, a limited partnership formed by Royal Dutch Shell (RDS.A, RDS.B) launches its IPO of 37.5M common units in New York.
    • The units being offered represent a 27.2% limited partner interest in Shell Midstream, or 31.3% if the underwriters exercise in full their option to buy additional common units; Royal Dutch Shell will own the remaining limited partner interest as well as its 2% general partner interest.
    • The units are expected to be listed on the NYSE under the ticker SHLX.
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  • Oct. 16, 2014, 7:22 PM
    • Although weaker oil prices mean energy companies and investors can expect lower profits in the coming months, big integrated oil majors may find their unloved oil refining businesses will soften the blow, according to a WSJ report.
    • For the likes of BP and Shell (RDS.A, RDS.B), their refining operations become more profitable when the oil they use is cheaper; for each dollar-per-barrel of improved profit margin for refined products, BP generates $500M/year in extra pre-tax operating profit, and BP says that refining margin was $5.70/bbl higher in recent weeks than in Q4 of last year.
    • Exxon (NYSE:XOM) and Chevron (NYSE:CVX) may not see quite as big an improvement in refining margins as Shell and BP, as the glut of U.S. oil and natural gas and a ban on exporting most oil already gave U.S. refineries lower costs, but the U.S. companies still stand to benefit.
    • Low oil prices show “there is real advantage in having this integrated model,” Bernstein Research analyst Oswald Clint says.
  • Oct. 9, 2014, 7:19 PM
    • The cost of Kashagan, already the world’s most expensive oil project, is set to rise by at least $3.6B as the companies developing it are forced to replace more than 200 miles of leaking pipelines, FT reports.
    • The consortium - which includes Shell (RDS.A, RDS.B), Exxon (NYSE:XOM), Total (NYSE:TOT), Eni (NYSE:E) and CNPC (NYSE:PTR) - marked first production at the Kazakhstan field in September last year after spending $50B on its development, but production has been shut ever since, when sulfur-containing gas was discovered leaking from pipelines between the field and the shore.
    • FT says that a meeting of a Kazakhstan government group was told this week that the cost of replacing the pipelines and restarting production had been estimated at $1.6B-$3.6B, depending on the equipment chosen, and that the consortium would choose the more expensive, more corrosion-resistant option.
  • Oct. 9, 2014, 3:25 PM
    • Crushed by relentless anxiety about oversupply and weakening global demand, Nymex crude oil futures closed down $1.54 at $85.76/bbl, their lowest close since Dec. 2012, while Brent crude fell below $90/bbl for the first time in more than two years.
    • Including today's losses, WTI crude is down 6.2% since the start of the month and Brent has surrendered ~5%.
    • In the face of surging output, a move in WTI below its 10-year average at $82 is not out of the realm of possibility, Brown Brothers Harriman says, adding that "a break of $73/barrel could send WTI toward $64, which corresponds with the 2010 low."
    • Among big oil names so far today: APC -6.3%, LINE -4.6%, EPD -3.8%, DVN -3.8%, MRO -3.6%, HES -3.8%, KMI -3.7%, TOT -3.5%, STO -3.3%, RDS.A -3.1%, OXY -3%, KMP -3%, XOM -2.6%, COP -2.6%, MUR -2.6%, CVX -2.5%, BP -2.4%.
  • Oct. 9, 2014, 12:35 PM
    • Toymaker Lego will not renew a co-promotion contract with Royal Dutch Shell (RDS.A, RDS.B) following pressure from environmental group Greenpeace, which accuses Shell of being a big polluter and claims the oil company is using Lego “to clean up its image for dirty oil drilling."
    • More than 1M people have signed a Greenpeace petition to pressure Lego, and a video which depicts an oil spill in the Arctic made of Lego bricks has been viewed ~6M times on YouTube.
    • The first Lego sets featuring Shell-branded items were released in 1966.
  • Oct. 9, 2014, 9:56 AM
    • Global oil producers open broadly lower as oil prices continue to slide on concerns about high supplies and weak global economic growth (also): RDS.A -2.7%, STO -2.7%, TOT -2.5%, HES -2%, APC -1.7%, BP -1.6%, CVX -1.5%, COP -1%, XOM -0.8%.
    • Brent prices slump to $91/bbl, approaching two-year intraday lows, and Nymex crude tumbles to $86.67/bbl to an 18-month intraday low.
    • The EIA said yesterday that U.S. crude supplies rose by a more than expected 5% last week, while gasoline and distillate inventories unexpectedly grew as well.
    • Barclays is cutting its oil price forecasts: It now sees U.S. crude averaging $85/bbl in Q4 and $89 in 2015, down from previous estimates of $98 in Q4 and $100 next year, and Brent crude averaging $93/bbl in Q4 and $96 in 2015, down from a respective $106 and $107 previously.
  • Oct. 8, 2014, 9:15 AM
    • Royal Dutch Shell (RDS.A, RDS.B) will sell a productive Nigerian oil block to a consortium led by oil-trading firm Taleveras Group for more than $2.5B, WSJ reports.
    • In addition to OML 29, the largest of the southern Niger Delta assets Shell put up for auction last year, the deal reportedly includes the 60-mile Nembe Creek pipeline, which moves oil through the Delta to the Atlantic coast and serves as one of the country’s main crude arteries.
    • Shell has been working to sell several of its onshore Nigerian holdings, which have been plagued by leaks coming largely from oil theft.
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  • Oct. 8, 2014, 7:42 AM
    • Royal Dutch Shell (RDS.A, RDS.B) says it has started oil production from the Gumusut-Kakap floating platform off the coast of Malaysia, the latest in a series of Shell deepwater projects.
    • Shell expects the Gumusut-Kakap platform to reach annual peak oil production of ~135K bbl/day when fully ramped up.
    • The project is a joint venture between operator Shell with a 33% stake, ConocoPhillips (NYSE:COP) with 33%, Malaysia's state-run Petronas with 20%, and Murphy Oil (NYSE:MUR) with 14%.
  • Oct. 7, 2014, 8:59 AM
    • Canada scores a victory as the European Union abandons plans to label oil sands as dirtier than other forms of crude, removing a major potential obstacle to exporting the fuel to Europe.
    • The watering down of the proposals, the result of strong lobbying by Canada, means that oil suppliers will be able to put oil from tar sands in the same category as conventional oil, whereas it would previously have been designated as 25% more carbon-intensive.
    • EU sources say the desire for a trade deal with Canada was a factor given the situation with Russia.
    • BP, Shell (RDS.A, RDS.B) and Exxon (NYSE:XOM) have major oil sands projects in Alberta.
  • Oct. 6, 2014, 2:19 PM
    • Malaysia’s Petronas makes its most specific threat yet to delay development of its proposed C$10B Pacific Northwest natural gas export terminal on Canada's Pacific coast, as CEO Shamsul Azhar Abbas says the Canadian and British Columbia governments must commit to lower taxes by the end of this month to meet its mid-December target for a final decision.
    • The CEO says “current project economics appear marginal” based on the company's latest internal assessment, and that if Petronas is unable to move forward with the project this year it probably would not reconsider the Canadian Pacific coast “until the next LNG marketing window, anticipated in 10-15 years.”
    • In April, Petronas sold a 15% stake in the project to Sinopec (NYSE:SNP); earlier, Japan Petroleum Exploration and Indian Oil Corp. each took 10% stakes.
    • Backers of competing LNG-terminal plans in B.C. include Exxon Mobil (NYSE:XOM), Royal Dutch Shell (RDS.A, RDS.B) and China’s Cnooc (NYSE:CEO).
  • Oct. 2, 2014, 2:35 PM
    • Liquefied natural gas projects in Africa, Canada and Australia face delays or even cancellation as global demand growth slows and U.S. output increases, Goldman Sachs says in a new report.
    • Worldwide demand for LNG will grow 5%/year compounded by 2020 and 4% by 2025, the firm says after previously forecasting growth of 6% and 5%, respectively.
    • Even the U.S. will not be spared from the pullback given the substantial contracts signed in recent years with U.S. LNG projects, Goldman says, adding that "investors should seek exposure to low-cost LNG export capacity, and be realistic about expectations for further contracts.”
    • Several projects in Canada and Australia likely will face deferrals due to uncertain production costs and price-sensitive buyers, with Papua New Guinea having perhaps the lowest risks as it expands LNG production, Goldman says.
    • "Given the industry’s renewed focus on capital discipline in recent times, we are observing a number of high-cost LNG projects deprioritized in the investment queue by major companies" such as Chevron (NYSE:CVX), Royal Dutch Shell (RDS.A, RDS.B), BG Group (OTCPK:BRGXF, OTCQX:BRGYY) and Exxon (NYSE:XOM).
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Company Description
Royal Dutch Shell PLC is an integrated oil & gas company. The Company explores for & extracts crude oil, natural gas and natural gas liquids. It also liquefies and transports gas.