|May 3, 2016 — 8:00 AM CEST
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Norway’s $870 billion sovereign wealth fund will back proposals to force Exxon Mobil Corp. and Chevron Corp., two of the biggest oil companies, to assess how climate-change policies can affect their business.
The fund, the largest of its kind, will vote in favor of shareholder proposals to introduce climate reporting at both companies’ annual general meeting on May 25, Norges Bank Investment Management, said in two separate statements. NBIM owned 0.78 percent of Exxon and 0.85 percent of Chevron at the end of 2015, according to its website.
“We encourage companies to consider the sensitivity of their long-term business strategy and profitability to different future regulatory and physical climate scenarios,” the fund said. “One such scenario should consider the successful implementation of policies to limit the likelihood of temperatures rising above 2 degrees Celsius.”
Norway’s sovereign wealth fund, which gets its mandate from the government, has added responsible investment criteria spanning from a ban on tobacco companies to excluding some weapon producers and most recently restrictions on the ownership of companies linked to coal production or consumption. It started declaring voting plans ahead of some company general meetings last year, and supported proposals at Royal Dutch Shell Plc and BP Plc similar to those now submitted at Exxon and Chevron.
The fund will also vote for a proposal at Exxon to require the company to separate the role of chairman from that of chief executive officer, two positions currently held by Rex Tillerson. Norway’s fund will oppose the re-election of Tillerson to Exxon’s board and the re-election of Chevron CEO John S. Watson to his company’s board, which he currently leads.
While the fund will go against the recommendation of Exxon and Chevron’s management teams on these proposals, it will vote with them on other issues.
Before it's here, it's on the Bloomberg Terminal.|
|Royal Dutch Shell plc 1Q 2016 -- Forecast
Dow Jones News
Shell B (LSE:RDSB)
Intraday Stock Chart
Today : Monday 2 May 2016
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FRANKFURT--The following is a summary of analysts' forecasts for Royal Dutch Shell plc (RDSA) first-quarter results, based on a poll of six analysts conducted by Dow Jones Newswires. Figures in million dollars, EPS and dividend in dollar, target price in pence, production in thousand barrel of oil per day (kboe/d), according to IFRS). Earnings figures are scheduled to be released May 4.
Earnings EPS Production
1st Quarter adjusted(a) adj.(a) (kboe/d)
AVERAGE 849 0.12 3,531
Prev. Year 3,246 0.52 3,166
+/- in % -74 -76 +12
Prev. Quarter 1,825 0.29 3,039
+/- in % -53 -57 +16
MEDIAN 949 0.13 3,495
Maximum 1,330 0.18 4,007
Minimum 200 0.07 3,027
Amount(b) 6 6 6
Canaccord 200 0.08 4,007
Deutsche Bank 1,017 0.14 3,194
Jefferies 1,330 0.18 3,469
Morgan Stanley 1,188 0.15 3,521
Santander 880 0.12 3,969
Target price Rating
Canaccord 1,550 Hold
Deutsche Bank 2,035 Buy
Jefferies 2,404 Buy
Santander 1,953 Buy
Morgan Stanley -- Overweight
Year-earlier figures are as reported by the company.
(a) Clean cost of supplies.
(b) Including anonymous estimates from one more analyst.
(END) Dow Jones Newswires
May 02, 2016 10:13 ET (14:13 GMT)|
|Why oil majors still pay lush dividends as profits plunge
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To the giant energy companies, their generous dividends remain sacrosanct, even as low oil prices punish their bottom lines. And although many Wall Street savants predict the four major players eventually will be forced to lop dividends, company managers are adamant that won't happen.
As a survival measure, scores of smaller energy outfits have axed their payouts during the oil bust. Many of these companies fell into bankruptcy or other restructurings. But the quartet of oil majors possesses the market reach and financial heft to slog through their industry's troubles, at least for the time being. So, they keep defiantly paying the rich dividends.
Exxon Mobil (XOM), which announced Friday that profits for this year's first quarter sank 63 percent, nevertheless hiked its quarterly payout 3 percent, to 75 cents per share. That marked Exxon's 34th straight year of dividend hikes. And the dividend announcement came on the heels of Standard & Poor's stripping Exxon of its pristine AAA credit rating earlier last week.
One reason S&P cited for the downgrade was Exxon's "large dividend payments." In 2015, it had $16.2 billion in net income, which was almost half of 2014's showing. In spite of the earnings slide, by S&P's count, Exxon last year shelled out some $12 billion in dividend payments.
Also Friday, Chevron (CVX) posted a $725 million loss, its second consecutive quarter in the red in 13 years. It kept the dividend level steady, though.
Even BP (BP), suffering from massive ongoing expenditures to atone for its catastrophic 2010 oil spill in the Gulf of Mexico, is maintaining its nice quarterly dividend at 60 cents per share. The British firm last week reported a 79 percent drop in first-quarter earnings.
Royal Dutch Shell (RDS.A), due to report its performance on Wednesday, will see earnings per share tumble by 68 percent, compared to 2015's first quarter, according to analysts' estimates. Last year, the Anglo-Dutch company's chief executive, Ben van Beurden, guaranteed the dividend will remain inviolate through 2016.
The oil majors provide investors with handsome yields (that's the dividend divided by the stock price): 3.4 percent for Exxon, 4.1 percent for Chevron, 7.2 percent for BP and 6 percent for Shell. Those compare favorably to the 1.9 percent yield for the broader market. By S&P's reckoning, energy companies made up 60 percent of U.S. corporate dividends, by dollar volume, in 2016's first quarter.
"The dividend is a core reason to invest in the oil majors," said Joe D'Angelo, a partner in Carl Marks, an investment firm. "Cut it and you risk a trade-off" of the stock. Although the majors' stocks are up a bit this year, they're way down from two years ago. Think how much worse they would be without the attraction of the dividend.
Depressed oil prices, which have caused so much distress in the energy business, show little sign of returning to comfortable levels. The price was around $110 per barrel in 2013 and then sank to $26 last year, amid a vast expansion of global output that has led to an enormous glut.
Oil's price has edged up to $46 per barrel lately, but further advances will be tough. While production pullbacks in North America and elsewhere have eased the oversupply somewhat, continued pell-mell pumping in the Middle East is a formidable obstacle to price improvement. Shell's van Beurden has said his company's break-even price is $50 per barrel.
Trouble is, even if the oil price does climb to $60, Goldman Sach's (GS) head of commodities research, Jeff Currie, argued that the Big Four won't be able to keep paying so lavishly. The commitment to high dividends was struck during better days for the energy sector, he said.
The majors' devotion to outsized dividends rests on their breadth of activities. They have a hand in all aspects of the energy business, from exploration and production to gasoline refining and chemical manufacturing. While the money they make from finding and extracting petroleum has dwindled, refining it benefits from the lower costs. Ditto chemicals.
The four biggest oil companies' geographic span is daunting. Exxon, which often tops the list of the world's most valuable companies -- not counting huge state-owned entities like China's -- has operations on every continent except Antarctica.
The majors' smaller rivals don't enjoy such strength and diversification. ConocoPhillips (COP), for instance, slashed its dividend by two-thirds in February, trying to stem losses. CEO Ryan Lance termed the decision "gut-wrenching." In 2012, Conoco spun off its refining unit. Diamond Offshore Drilling (DO), which focuses on production, eliminated its dividend this winter, as the firm turned unprofitable.
Rather than touch payouts, the four largest publicly traded oil companies have all whittled down their stocks buybacks, trimmed costs and shrunk capital spending, such as searches for new oil fields. Howard Silverblatt, senior index analyst for S&P Dow Jones Indices, noted that buybacks and spending are more flexible than dividends, whose level investors closely follow. Reducing the payouts, he said, "is admitting to the world: 'We have a problem.'"
The largest firms have a greater ability to tap capital markets than smaller competitors do. And they have enormous amounts of cash, which they can deploy to pay investors. "Those huge cash piles mean they don't have to depend on cash flow" to fund dividends, Carl Marks' D'Angelo said.
The oil majors may yet disappoint investors. For the moment, however, they smugly believe they won't.|
the grumpy old men
|Oil Companies Begin to Benefit From Cost Cuts
Dow Jones News
Historical Stock Chart
1 Month : From Apr 2016 to May 2016
Click Here for more BP Charts.
By Sarah Kent
LONDON--The price of oil hit a 13-year low during the first three months of 2016. But early financial results show that some of Europe's biggest energy companies performed better last quarter than they have in months.
BP PLC said earlier this week its net loss shrunk nearly 80% from the prior quarter. On Wednesday France's Total SA and Norway's Statoil ASA said they were back in the black last quarter after suffering losses in the last three months of 2015. And while Italian oil giant Eni SpA said Friday it had racked up a nearly billion-dollar loss for the quarter, its share price remained flat in early trading since the loss wasn't as bad as many investors predicted.
The results reflect aggressive cost cuts the companies have made to cope with a nearly two-year slump in crude prices. It isn't yet clear if U.S. rivals have made similar progress-- Exxon Mobil Corp. and Chevron Corp. report earnings later on Friday. Analysts forecast Exxon will report the lowest quarterly profit since it bought Mobil in 1999. Chevron is expected to report a second-consecutive quarterly loss for the first time in a quarter-century. ConocoPhillips this week reported a $1.47 billion loss for the quarter after making a profit a year earlier.
Beyond individual companies' performance, there has been widespread optimism in market recently, as oil prices have jumped 22% since the beginning of April.
In the U.S., the extreme belt tightening by oil companies is finally leading to declines in crude output that could help rebalance the global market. Federal figures show U.S. oil production fell below 9 million barrels a day a few weeks ago, after peaking at 9.7 million in April 2015.
"Industry spending could be set to decline to levels not seen since 2007," analysts at Citi Research said Monday, adding that additional cuts "should be sufficient to deliver the necessary declines in global production, with balance appearing within reach in the second half of 2016."
By any measure, the first quarter of 2016 was a bad one for oil companies. For the most part, their profits were sharply lower compared with a year earlier, and they spent more cash than they brought in. But the European companies' earnings represented an improvement over more recent results, to the surprise of investors and analysts such as Bernstein Research, which last week said the beginning of 2016 would be "the zero earnings quarter."
Instead, big cost cuts in areas like staffing levels and exploration budgets since 2014 helped the companies generate results that were an improvement on the past quarter. Combined with a recent uptick in oil prices, that has helped boost the companies' share prices in recent days.
BP's shares rose more than 4% Tuesday after it announced its first-quarter results. Statoil's share price also shot up over 4% Wednesday, while Total traded 2% higher. That was due partially to low expectations among investors.
"This industry has overpromised and under-delivered for a decade so it isn't surprising when executives said 'we can cut costs,' there was some skepticism," said Chris Wheaton, a portfolio manager at Allianz Global Investors "But actually they are delivering ahead of their own expectations."
BP said Tuesday its costs over the last 12 months were $4.6 billion lower than in 2014, and earlier this year announced plans to cut 7,000 jobs. Total said it is on track to hit its targeted $900 million of savings this year and has managed to squeeze production costs while increasing output. Statoil bolstered its first quarter by reversing $308 million-worth of impairments after driving down project costs.
"These businesses have been in the past run along fairly flabby lines in terms of cost control," said Richard Hulf, a manager at Artemis Investment Management's global energy fund. "This oil price has caused people to take another look at operations so I think we're seeing for the first time what a properly managed oil business looks like."
That kind of optimism may not extend to U.S. shale producers, typically smaller companies grappling with high debt. At a conference Wednesday, Scott Sheffield, the chief executive of U.S. producer Pioneer Natural Resources Co.--which reported a $267 million first-quarter loss--warned that "there's more debt in this downturn than I've ever seen." That may force companies to make big payments before ramping up production even if the oil price goes up.
contributed to this article.
(END) Dow Jones Newswires
April 29, 2016 08:25 ET (12:25 GMT)|
|Anthony McAuley: Swimming in oil? Get ready for the supply crunch
April 28, 2016 Updated: May 1, 2016 04:29 PM
Platts may add US crude to price assessments
Total beats earnings forecast despite prolonged fall in oil prices
Business Extra podcast: Saudi’s look beyond oil - Ep 1
Saudi Arabia Vision 2030: Eight things you need to know about the reform plan
After Doha, what next for Opec?
The world oil market is heading for a supply crunch on current investment trends, a new report warns.
Wood Mackenzie, the Edinburgh-based oil and gas consultancy, says that the severe drop in exploration and production (E&P) investment, as well as a string of poor exploration results, means the world oil market is on track to hit a shortfall of 4.5 million barrels per day by 2035.
The trend began even before the oil price crash, but has been made worse by the deep cuts in investment the industry has made since last year.
As WoodMac points out, the volume of newly discovered hydrocarbon liquids more than halved in recent years, declining from an average of 19 billion barrels each year in the 2008-11 period, to an average of 8 billion barrels a year in the 2012-15 period.
As well as lower volumes, the discoveries of the past four years have been largely “gas prone", so that the drop in crude oil reserves has been even more dramatic.
The WoodMac report echoes warnings from other energy watchdogs, including the US government’s Energy Information Administration (EIA) and the OECD’s International Energy Agency (IEA), both of which have forecast that the oil price depression since late 2014 could eventually result in an equally sharp upturn in oil prices as investment in exploring for new oil provinces dries up.
The EIA has said that E&P investment cycles in the US track oil prices closely, with investment peaking in 2014 at US$158 billion, having averaged $122bn a year over the preceding decade as oil prices tripled.
US investment tracked plunging oil prices down last year, to just above $100bn, and the EIA says investment up until 2020 is likely to be well below levels of the previous decade as oil prices recover only gradually.
AlixPartners, a US consultancy, estimated that E&P investment by publicly listed oil companies globally fell from peak levels above $740bn in both 2013 and 2014 to $541bn last year, and it projects investment will fall further, to about $379bn this year.
WoodMac estimates that the proportion spent just on finding oil (exploration and appraisal) will average just $40bn a year up to 2018.
It is not just the level of spending that is worrying but the nature of that investment too, according to WoodMac.
“The shift in the industry’s focus towards exploring smaller near-field opportunities, with lower cost bases and shorter lead times, now means that fewer large, high-risk frontier finds are likely to be made in the near term," says Andrew Latham, a WoodMac analyst.
Although the oil price crash has cut deeply into investment, the oil glut has taken some time to abate and most forecasters expect only a gradual recovery in prices.
As WoodMac points out, about 90 per cent of the oil discovered during peak investment years in the 2000s is yet to be produced, so that about 18 million bpd could be added to supply over the next decade from these discoveries to replace depleted reserves elsewhere.
But because of the long lead times needed to develop large, conventional oil finds, the market could start to move toward shortfall thereafter if investment trends continue over the next few years.
“Look, we know there are cycles in the industry and we’re not predicting there is going to be an inevitable shortfall," says Patrick Gibson, the head of global oil supply research at WoodMac. “We’re just pointing out what are likely to be the consequences of current investment trends.
“The size and nature of the next tranche of discoveries is crucial for maintaining long-term global oil supply growth."
Anthony McAuley covers the energy beat for The National|
29 Apr'16 - 11:11 - 396 of 402 2 0
Pivoting week coming up next month
04 May 2016
First quarter 2016 results
ALL SOUNDS RATHER EXCITING|
|The Sunday Telegraph: The North Sea sector could face the first wave of workers strikes in a generation as union tensions rise in response to longer hours and lower pay for the embattled workforce.
Mail on Sunday: Tory MP Sir Alan Duncan is under fire for refusing to help workers in his constituency in their battle with a firm that has contributed thousands of pounds to his local Conservative Association.
The Sunday Times: Royal Dutch Shell is set to unveil a steep fall in profits this week, laying bare the challenge for chief executive Ben van Beurden to justify his £35 billion takeover of rival BG.|
|CHUCKLE NOT LIKEY BIG MACS
HAPPENS TO ME AT LEAST ONCE IF NOT TWICE A MONTH
SUNNY HERE WITH A NIP IN THE AIR
|or THE MINUTE THE SHARE IS SOLD IT JUMPS UP 10pc
thus the reason for the old saying of wise banker
NEVER SELL SHELL|
|holiday weekend food for thought
BIG MAc Murphys LAW
SHARES ONE HAS WATCHED RESEACHED and INTEND BUYING
JUMP UP 10pc just before your buy order has been put in|
|US tight oil 'cannot overcome gravity': IEA
29 Apr 2016, 5.43 pm GMT
US shale oil production will decline in the short term, despite the resourcefulness of the sector, the IEA's chief economist says
Paris, 29 April (Argus) — US tight oil production ‘cannot overcome the law of gravity', IEA chief economist Laszlo Varro says in an interview with Argus. Edited highlights follow:
How is the lower oil price environment affecting supply and demand?
Low oil prices did trigger a measurable amount of demand growth. But it is also fair to say that the price impact on demand is significantly weaker than it used to be. The only really large oil market where lower prices directly fed through to end-users was the US. We had some demand pick-up, but most of the rebalancing will have to come from supply.
How is the lower oil price environment affecting investment?
Companies are cutting investment in three broad categories. One is US light tight oil (LTO). We have been impressed by the resilience of the US industry, both from the technological and financial points of view. They have technological resilience because they have been reducing drilling and hydraulic fracturing costs to a remarkable extent. And they also have financial resilience. In the first quarter of 2016, with $30-40/bl oil, with all the credit ratings agencies putting the US shale industry on watch, the US shale independents raised more than $10bn of fresh capital. They are playing their cards very well, but they cannot overcome the law of gravity. They are retrenching to the hotspots where activity is still happening, but there is no doubt that the short-term outlook is a significant decline for oil.
Then you have a second category of investment cuts, which are long-term, difficult mega-projects. Probably, it is more appropriate to speak of delays than investment cuts, because in most cases the companies that are involved — this is the field of super-majors essentially — are not stating that they are never going to do the projects, but they are saying: ‘This is on hold'.
Companies are cutting investment in normal field management and field development operations. When companies cut investment to the bone on secondary field development and enhanced recovery of existing assets, it shows up in the depletion rate of existing production. In this category, very often there is a geological window of opportunity — this is the time when you can do your enhanced recovery project. You miss this window of opportunity because of investment cuts, and the oil stays underground forever, and the ultimate recovery rate will be affected. We believe that investment will pick up as early as 2018, for US LTO output to come back and by 2020 reach a higher production level than the 2015 peak. Mega-projects are much more dependent on the long-term evolution of the energy policy environment.
Is the current level of investment enough to meet future oil demand?
There is absolutely no doubt that the current level of investment will not meet demand growth [to 2020]. With current investment cuts, if we do not invest more than we are investing today, we will actually see a significant physical decline in production.
How would a wave of bankruptcies in the US shale industry affect output?
US bankruptcy legislation creates a very strong incentive to continue to operate the assets. If there is a low marginal cost asset that generates positive cash flow, the incentive is to continue to operate it and to try to minimise the loss for creditors and investors. The sad fact is that not all shale plays are created equal. The US has some absolutely exceptional ones such as Marcellus for gas or Permian for LTO. But the US has some plays that are average or below average.
Send comments to firstname.lastname@example.org|
|next week should be interesting for the market in general as well as for SHELL
IT LOOKS LIKE THE TECHIES ARE SIDING WITH THE SELL IN MAY GANG
have a super duper weekend