Shell Share Discussion Threads

[maywillow] 26/1/2018 13:09

Saudi Aramco, the Crude-Oil Giant, Becomes a Force in Refining
26/01/2018 12:29pm
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By Christopher Alessi

DUBAI -- Saudi Arabia's state oil company is building an oil-refining empire, a major shift for the world's No. 1 crude producer as it tries to shore up its balance sheet ahead of the world's biggest-ever IPO and make up for income lost to OPEC production cuts.

Over the past five years, Saudi Arabian Oil Co., known as Aramco, has boosted its global refining capacity by more than a third to 5.4 million barrels a day, helped by new facilities along the kingdom's Red Sea and Persian Gulf coasts, according to Scottish energy consultancy Wood Mackenzie. The kingdom also has commissioned an additional refinery in the southwest of the country, set to come online in 2019.

These moves and others including taking full control of the biggest U.S. refinery, in Port Arthur, Texas, have vaulted Aramco's global refining capacity beyond Western rivals such as Exxon Mobil Corp., Royal Dutch Shell PLC and BP PLC. But unlike Aramco, the international oil majors already had strong downstream businesses to bolster their earnings when crude prices plummeted just over three years ago.

Saudi Arabia is now one of the top three exporters of diesel to Europe -- the world's largest diesel market for passenger vehicles -- grabbing market share from the continent's two longtime suppliers, Russia and the U.S. Saudi diesel sales to Europe in October rose more than 50% year-over-year, while European imports of American diesel fell by 34% during the same period, according to the International Energy Agency.

Rising Saudi shipments of fuel products have helped soften the financial blow of slashing crude-oil production and exports with the Organization of the Petroleum Exporting Countries cartel. As of November, Saudi Arabia's crude exports were down 15% from a year earlier, but exports of refined products rose nearly 28% over the same period, according to the Joint Organizations Data Initiative, an international group that tracks energy markets.

Russia has passed Saudi Arabia as the world's biggest producer, and the U.S. is set to overtake Saudi crude output for the first time in a generation. At the same time, the kingdom is fighting off threats to its market share in China from Russia, the U.S. and fellow OPEC members like Iraq.

The refining investments were years in the making but were accelerated by 2014's historic oil-price collapse and the kingdom's subsequent plans to wean itself off dependence on crude exports for revenue.

The new refining capacity also helps bolster Aramco ahead of a planned initial public offering that Saudi Crown Prince Mohammed bin Salman has estimated could be valued at up to a record $2 trillion. The prince has put the Aramco IPO at the center of his efforts to energize and diversify his country's economy.

Aramco declined to answer questions for this article. Last April, in remarks at Columbia University, Aramco Chief Executive Amin Nasser said the company aims to increase its refining capacity to between 8 million and 10 million barrels a day in an effort to better balance the company's business.

For a company that lags behind Western peers in transparency and efficiency, Aramco's refining capabilities help it to be "more of an integrated global energy company" like the publicly listed oil giants, said Ayham Kamel, the head of political risk consultancy Eurasia Group's Middle East division.

BP, Exxon and others use their refineries to help them weather oil-market downturns because those parts of the business buy oil and do well when prices are low. Aramco still lags behind nearly all the world's big oil companies when it comes to how much of its own crude output it refines -- less than half -- which is a measure of how vertically integrated an oil major is, according to the IEA.

"It's important for the [Saudi] political leadership to have Aramco be more than just a crude exporter in order to maximize the value of the company," Mr. Kamel said.

Aramco's refining operations span the world, with joint ventures in South Korea, Japan and China, in addition to the giant Motiva refinery in Port Arthur, Tex. These facilities give the company a guaranteed outlet for its crude oil in its most important markets.

But its biggest base is in Saudi Arabia itself, where Aramco has capacity to refine about 3 million barrels of crude a day. That is more than any single European nation, though it falls far short of the country with the most refining capacity -- the U.S., with 18.6 million barrels a day, according Wood Mackenzie.

The Saudis have been exporting fuels like diesel at an opportune time. Since the summer, gasoil futures on London's Intercontinental Exchange -- a benchmark for diesel -- have soared by close to 30%, as a booming global economy has bolstered industrial demand for the fuel.

--Summer Said contributed to this article.



(END) Dow Jones Newswires

January 26, 2018 07:14 ET (12:14 GMT)

[maywillow] 26/1/2018 12:18

Shell expected to stick to “generous̶1; dividend
10:38 26 Jan 2018
Shell releases final results on Thursday, February 1, and UBS expects the oil major to report 3.7bn barrels of crude production per day.
Shell logo
UBS expects Shell to reveal a 5% drop in upstream production

Investors can expect Royal Dutch Shell Plc (LON:RDSB) to stick to its generous dividend when it releases its results on Thursday, that’s according to UBS, which has repeated a ‘buy’ recommendation.

"We are forecasting that the dividend is held (the payout is already generous) but that the share buyback, targeting $25bn across 2018-20, will begin immediately (ironically it is starting as the shares hit all-time highs, anti-diluting issuance mostly conducted at a cyclical low), " UBS said in a note.
READ: Shell approves first major North Sea project in six years with Penguins development

UBS expects Shell to reveal a 5% drop in production, reflecting an upstream business “held back” by two interruptions as well as post restructuring asset sales.

The interruptions come from the temporary shut-down of the Forties pipeline in the North Sea (which took 20,000 boepd offline for three weeks) and a fire on the Enchilada platform in the Gulf of Mexico (knocking out operations accounting for between 50-60,000 boepd) which is ongoing.

The upstream decline will partially offset by two new fields, Gorgon and Schiehallion, and expansion in Brazil, said analyst Jon Rigby.

The analyst forecasts group production at 3.7mln barrels oil equivalent per day.

Rigby, meanwhile, highlighted positives for Shell’s integrated gas business where the analyst expects earnings to benefit from rising LNG contract prices, stronger ‘spot’ markets and trading activity.

He sees the downstream businesses in a weakened operating environment, expecting that improved crude prices will have compressed margins, meanwhile, the liquid trading business is described as “a wild card”.

Considering the group’s finances, Rigby said: “in terms of the balance sheet, we forecast gearing falling by around 200bps to 23.6% but this will be somewhat dependent upon working capital movements which may be material.”
READ: Barclays predicts a re-rating for Shell shares

The analyst forecasts around US$6.6bn of proceeds for asset disposals in the quarter, and sees capital spending being below the US$25bn guidance for the year.

He also notes that the company will also give a strategy update alongside the results – and no doubt that will be a key focus to investors.

[maywillow] 26/1/2018 10:49

TIDMRDSA TIDMRDSB

Voting Rights and Capital
· · · · · · · · · · · · · · · ·

In conformity with the Disclosure Guidance and Transparency Rules, we hereby
notify the market of the following:

Royal Dutch Shell plc's capital consists of 4,597,136,050 A shares and
3,745,486,731 B shares, each with equal voting rights. Royal Dutch Shell plc
holds no ordinary shares in Treasury.

The total number of A shares and B shares in issue is 8,342,622,781 and this
figure may be used by shareholders as the denominator for the calculation by
which they will determine if they are required to notify their interest in, or
a change to their interest in, Royal Dutch Shell plc under the FCA's Disclosure
Guidance and Transparency Rules.

[grupo guitarlumber] 25/1/2018 20:44

Shell B
2,562 +0.33%

[waldron] 25/1/2018 16:57

Announcement date February 1, 2018
Ex-dividend date February 15, 2018
Record date February 16, 2018

[waldron] 25/1/2018 16:51

Shell A
2,512.5 +0.36%



Shell B
2,562.5 +0.35%

PREMIUM SET AT 50p

[waldron] 25/1/2018 15:45

FJ

I WAS THINKING MORE ABOUT THE PREMIUM DISAPPEARING GRADUALLY AND ALTOGETHER
AFTER NOVEMBER EX DIVI DATE

[fjgooner] 25/1/2018 13:30

Waldron,

I don't really have a strong opinion either way on the A versus B issue.

Having said that, I only ever buy the B like I did this morning to fill this years ISA.

FJ

[ianood] 25/1/2018 08:58

waldron - good point about Chinese and Russian interest - suppose that will help dramatically in the well massaged poo leading up to the float?

[waldron] 24/1/2018 21:01

no worry FJ

LIQUIDITY OUT THERE MIGHT WELL BE SLOSHING ABOUT

chinese and Russian very eager to invest in the ipo apparently



despite that, the shares making up the stock market pie may well change weighting
in any portfolio

Shell certainly is great for the dividend and is a must for a well balanced portfolio

The well being and success of Shell no longer can be correlated with the oil prices imo

WHAT THINK YOU ABOUT THERE BEING NO LONGER THE NECESSITY OF A AND B SHARES


7 DAYS TO GO TO FIN DAY

CHEERS

[fjgooner] 24/1/2018 20:28

Waldron,

Ray Dalio, Chairman of Bridgewater Associates was just on Bloomberg saying

"It's stupid to own cash in this kind of environment", saying there's a huge amount of cash out there looking for somewhere to invest. And that this kind of environment is good for stocks and bad for bonds.

So there should be plenty of liquidity for inward investment over the year ahead, so I'd not be worried about Aramco. If anything, it'll re-focus attention on a sector finally starting to boom after the last few years struggles.

The Saudis should get a great IPO away very successfully with both Brent and WTI hitting yet new multi-year highs today - Brent at $70.82 and WTI at $65.92 right now.

And the Saudis will surely do all they can to maintain this healthy oil price environment throughout the period running up to the Aramco float.

FJ

[waldron] 24/1/2018 14:10

NO IT WAS NORWAY


anyway you seem to believe that the shares prices will not be substantially impacted
by the ipo

as always

time will tell

cheers

[ianood] 24/1/2018 14:03

That will be Qatar then ;)

Seriously 'tho an A1 rating for the sovereign is non too great and again will restrict investor appetite!

[waldron] 24/1/2018 13:52

CHUCKLE

ITS BEING OPEN MINDED AND TRYING TO THINK OUTSIDE THE BOX

IPO HAS YET TO BE ANNOUNCED

AND MARKETED

will be interesting to see if there might be tastey inducements such as paying
a dividend above the norm


I KNOW OF ATLEAST ONE SOVEREIGN WEALTH FUND THAT WILL NOT BE BUYING BUT THEN
AGAIN IT MIGHT HAVE SOLD ITS OIL MAJORS SHARES BY THEN

[ianood] 24/1/2018 13:42

Point taken about liquidity but:

large funds/big investors in the main do have to comply with:

internal rules about listing criteria;

level of exposure to any one country and company.

Let's not get paranoid!!

[waldron] 24/1/2018 13:35

IANOOD

Its not a question as to whether retail investors avoid the likes of shell or bp


ITS, WILL THE BIG INVESTORS WEIGHT THE STOCK MARKET DIFFERENTLY THEREFORE HOLDING
LESS OFF ALL OTHER SHARES AND CREATE A FORCED SELLING SCENERIO WHEREBY SHARE PRICES
FALL


OR IS THERE SUFFICIENT LIQUIDITY IN THE MARKET TO BUY THE IPO WITHOUT IMPACTS ON OTHER
SHARE PRICES

[ianood] 24/1/2018 13:26

Waldron - Remember the domicile of Aramco, the quality of audit that the company will have been subjected to (just a concern not a criticism), the fact that London or New York are fudging listing requirements to accommodate the company. The latter point could reduce the number of potential investors as it may compromise fund crieria. All in all I prefer to sleep at night with RDSB and BP!

[waldron] 24/1/2018 13:11

HOGGY

ITS THE AFFECT ON SHARE PRICES GENERALLY

IT MIGHT AFFECT WEIGHTINGS OF FUNDS INVESTING IN FT100 FOR EXAMPLE

WILL INVESTORS BE REDUCING HOLDINGS TO INVEST IN THE NEW IPO

YOU MIGHT FIND THAT ARAMCO HAS ASSETS WORLD WIDE TOO

[2hoggy] 24/1/2018 12:47

Logically where would you rather invest,a company like shell with assets all around the world or a company which is co-owned by an arab government which has all its assets in one country.Their oil assets have never been checked by an independent western auditor.

The big boys in the city will no doubt invest if they see a quick profit,it will be interesting to see if it makes much difference to the large western oil companies.

[waldron] 24/1/2018 12:20

if and when aramco is floated on the LONDON STOCK EXCHANGE what might be the affect
on share prices especially those of the oil majors


informative comments appreciated

[fjgooner] 23/1/2018 20:39

Bloomberg: Big oil plans tenfold expansion of cost-cut collaboration

Jan. 23, 2018 11:18 AM ET|By: Carl Surran

•The world’s biggest energy companies plan to significantly widen a two-year effort to standardize the kit they use to pump oil and gas, hoping they can deliver significant cost savings, Bloomberg reports.

•"Standardization could save the oil and gas industry hundreds of millions of dollars every year," BP CEO Bob Dudley says in an interview at the World Economic Forum in Davos.

•The companies plan to expand their list of standardized kit to 40 from the initial four items agreed on when they started their collaboration in 2016, according to the report; the initiative includes BP, Royal Dutch Shell (RDS.A, RDS.B), Total (NYSE:TOT), Statoil (NYSE:STO), Repsol (OTCQX:REPYF, OTCQX:REPYY), Chevron (NYSE:CVX) and Saudi Aramco.

•BP CEO Bob Dudley also says the company is seeking to drive down costs below $40/bbl by the end of the decade.

[fjgooner] 23/1/2018 20:37

WSJ: China LNG demand sucks gas out of global market, raising prices

Jan. 23, 2018 12:44 PM ET|By: Carl Surran

•The price of liquefied natural gas is near three-year highs as China replaces coal with gas, sucking up global supplies of the fuel, WSJ reports.

•Chinese LNG imports rose by nearly 50% last year and the country has now passed South Korea to become the world’s second largest importer behind Japan, but the extra imports still have not been enough for some parts of Chinese industry; BASF (OTCQX:BASFY) stopped producing some chemicals at a Chongqing-based facility due to “a supply shortage of natural gas," and says production remains suspended and does not yet known when it will resume.

•Royal Dutch Shell (RDS.A, RDS.B), the biggest LNG shipper and producer, estimates trade will increase by a third from 2016 to 2020 to 350M metric tons/year.

•U.S. gas producers also are powering higher in today's trade: ECR +8.1%, AR +4.1%, SWN +3.4%, RRC +3.3%, GPOR +3.3%, CHK +2.9%, EQT +1.9%, COG +0.7%.