Shell Share Discussion Threads

[la forge] 17/4/2018 09:31

Oil Price Could Climb 15% by Year-end
Oil prices have the potential to rise another 15% over the remainder of 2018, as the market faces up to an undersupply and low storage ‘double hit’
Ashburton Investments
17 April, 2018 | 9:23AM


This article is part of Morningstar's "Perspectives" series, written by third-party contributors. Here, Richard Robinson, manager of the Ashburton Global Energy Fund discusses the future of the oil price.

oil energy basic materials commodities commodity natural resources

We are rapidly transitioning from a market drowning in oil – oversupplied and excess stored oil – to a new reality of undersupply and low storage levels. This is largely due to the collapse in the approval of new oil projects since 2014.

At the same time, the market is facing heightened risk to current supply – as a result of the lack of spend and increasing political volatility in oil-producing nations – such as Venezuela, Angola and Iran. The seed is being sown for a structurally higher oil price, combined with heightened probability of risk premium.

Due to the collapse in capital spend, we believe the implications for the oil price are going to remain bullish for some time to come. In order to meet demand, the oil market will soon increasingly rely on the growth in US shale production, currently 8% of total supply. It will also need an improving supply outlook for offshore production, which is more than 30% of production. However, offshore production will take four to seven years, from the point of project sign off, to produce first oil.

Last year, the world discovered the least amount of oil since the 1930’s, while 2016 and 2017 were not much better uncovering the least amount since the 1940’s. Compounding the challenge of undersupply, International Energy Agency demand expectations are more often than not hopelessly undercooked and on average their demand expectations have been revised up by around 700,000 thousand barrels per day since 2013.

Assuming 3.9% global GDP growth and a relatively steady oil price, we would not be surprised if oil demand increases 1.8 to 2 million thousand barrels per day this year, versus expectation of 1.3 million thousand barrels per day, driven by growth in China and India.
Sector Displaying Strong Fundamentals

The combination of improved pricing and the volume of work needed to restore the supply balance is likely to benefit a raft of sub-sectors within the oil sector. In 2013, when Brent crude was over $110 per barrel, the major oil companies were struggling to cover capex – let alone dividends – using organic cash flow. After cutting costs and making significant disposals, the oil majors have the ability to cover capex and pay dividends with Brent at $50 per barrel.

With the positive outlook for the oil price unfolding over the next few years, integrated oil companies are beginning to show significant cash balances and industry reserve replacement ratios appear increasingly challenged post 2020, a problem that needs addressing now. As a result, we believe capex in the offshore space is poised to move higher – following the turn in onshore spend.

The energy sector had a torrid time in 2017, despite a strong oil price. The weighting of energy stocks within the MSCI World Index is close to an all-time low, despite a 77% oil price rally from its lows. Combined with the improved fundamentals, this is a clear indicator the cycle is due to turn. The last time we saw such a wide divergence between oil price performance and equity performance was 2002, the following year was the start of the five-year energy sector bull run, when energy stocks outperformed the S&P by 180%.

In the upward period of the price cycle, we are looking to overweight subsectors displaying the highest oil price sensitivity – especially areas close to the source of the raw material, such as service companies and exploration and production companies. Given we believe the recent uptrend in the oil price will be sustained for the foreseeable future, we are currently overweight this area of the market – with our oil price sensitivity 30% higher than the MSCI Energy benchmark.

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[grupo guitarlumber] 16/4/2018 14:52

Shell’s CEO Tells Activists and Investors: Trust Me to Cut CO2
By Kelly Gilblom
16 avril 2018 à 14:49 UTC+2
From

Van Beurden says climate resolution at AGM is unnecessary
Company intends to expand in biofuels, clean power, hydrogen

Chief Executive Officer Ben van Beurden has the same message for activists seeking to bind Royal Dutch Shell Plc to deep emissions cuts, and investors concerned about the merits of shifting away from oil and gas: Trust me.

He advised shareholders on Monday to reject a resolution from climate group Follow This that would set clear targets for the company’s greenhouse-gas emissions, more specific than its current broad “ambition.R21; He also reiterated his intention for Shell to make most of its money from clean energy in 20 years, such as renewables, hydrogen or carbon capture in 20 years.

By his own account, Van Beurden understands best how to steer Europe’s largest oil and gas company through a world-shaking energy transition and is already several steps ahead of the activists pushing for a stronger stance on climate, and the fund managers who are dubious Shell has any role in a low-carbon world.

“Understanding what climate change means is one of the most important strategic questions on our mind today,” Van Beurden told reporters in a phone call Monday morning. “We are testing the boundaries of our thinking.”

The push to eliminate carbon emissions from the world is a life-altering challenge for oil and gas companies. By Shell’s estimate, to achieve goals set out in the Paris Climate Agreement and reduce the risk of catastrophic climate change, by 2060 the world must be eliminating more carbon than it’s emitting.
Paris Progress

Shell sees global emissions falling below zero to reach 2 degree warming target

Source: Royal Dutch Shell Plc "Sky Scenario"

Van Beurden has previously announced an ambition for the company to halve its “net carbon footprint” by 2050. That figure includes the company’s direct emissions as well as the those released when customers burn its products.

He plans to achieve this by reducing the carbon intensity of its products, meaning its portfolio will be less oil-heavy in the future. Shell is positioning itself to instead sell more natural gas and expand in biofuels. It also plans to increase its presence in the power market, providing renewable electricity for homes and vehicles.

That approach has drawn criticism. Follow This, the Dutch environmental group, has filed a shareholder resolution for the third straight year asking Shell to set specific targets for curbing greenhouse gas emissions in line with the Paris agreement. Investors will vote on the proposal on May 22.

In a 40-minute call with reporters, Van Beurden made the case that Shell’s existing energy transition plan is more progressive than what Follow This is proposing. Binding the company to a target would make it hard to shift course in the event that government policy or other changes affect the profitability of different technologies, he said.

“Do you want to follow a company that’s really internalized” the climate issue, he said. “Or do you want to have the more narrow and rigid views of an activist?”

The backers of the climate resolution weren’t satisfied with his assurances. "The rejection of this climate resolution shows the board does not want to commit to the Paris climate agreement," said Mark van Baal of Follow This.

While Shell has yet to convince activists, it also has to mollify mainstream investors that doubt the merits of being anything besides an oil and gas company. There are signs these concerns may already be affecting the share price of big oil companies, which haven’t rebounded as much as the rally in crude over the past six months.

Van Beurden’s got a message for them, too: Shell isn’t just an oil producer and won’t shrink along with hydrocarbons’ role in the energy mix of the future.

“We have to demonstrate that no there are some really sensible and good adjacencies that allow us to go into the new energy space,” he said. “We are more than just a pure exploration and production company.”

[grupo guitarlumber] 16/4/2018 10:59

Royal Dutch Shell Notice of AGM
16/04/2018 8:32am
UK Regulatory (RNS & others)


TIDMRDSA TIDMRDSB

ROYAL DUTCH SHELL PLC

NOTICE OF 2018 Annual General Meeting

Royal Dutch Shell plc (the "Company") announces that its 2018 Annual General
Meeting ("AGM") will be held at the Circustheater, Circusstraat 4, 2586 CW The
Hague, The Netherlands at 10:00 (Dutch time) on Tuesday May 22, 2018. The
Notice of Annual General Meeting (the "Notice") can be viewed and downloaded
from www.shell.com/agm.

The AGM will be webcast on the day so shareholders unable to attend in person
can still follow proceedings. More information about the webcast arrangements
can be found in the Notice and via the website referred to above.

SHAREHOLDER PRESENTATION, LONDON

A presentation has been arranged for shareholders at 11:00 (UK time) on
Thursday May 24, 2018 (two days after the AGM) at Central Hall Westminster,
Storey's Gate, Westminster, London, SW1H 9NH, United Kingdom. The Chair, the
Chief Executive Officer, the Chief Financial Officer and the Company Secretary
will be present.

This presentation is not part of the AGM. Further details can be found in the
Notice of Annual General Meeting.

NATIONAL STORAGE MECHANISM

In accordance with the Listing Rules, a copy of each of the documents below
will be submitted to the National Storage Mechanism and available for
inspection at:

Annual Report and Form 20-F for the year ended December 31, 2017
Notice of the 2018 Annual General Meeting
Notice of Availability of Shareholder Documents

Proxy Form relating to the 2018 Annual General Meeting

The Annual Report and Form 20-F for the year ended December 31, 2017 can also
be viewed and downloaded from the Company's website: www.shell.com/annualreport
.

Printed copies of the Notice and associated documents will be despatched to
those shareholders who have elected to receive paper communications.

April 16, 2018

Mark Edwards
Deputy Company Secretary

ENQUIRIES

Shell Media Relations

International, UK, European Press: [phone]

Shell Investor Relations

Europe: + 31 70 377 4540

United States: [phone]

LEI number of Royal Dutch Shell plc: 21380068P1DRHMJ8KU70
Classification: Additional regulated information required to be disclosed under
the laws of a Member State.



END


(END) Dow Jones Newswires

April 16, 2018 03:32 ET (07:32 GMT)

[florenceorbis] 15/4/2018 23:10

of course a correlation but delayed and slowly weakening

[ianood] 15/4/2018 22:04

florenceorbis - if you consider Total to be a major player/producer as indeed is RDSB i.e they both have natural long books as producers, then surely it is not unreasonable to assume a correlation of outcomes?

[2hoggy] 15/4/2018 21:25

This is the only reason the usa does what it does today because it has independence from the world market prices and does not have to rely on saudia any more for its oil.

Years ago the middle east controlled the amount of oil imported into the states and they were very wary of upsetting them...

[florenceorbis] 15/4/2018 19:32

Bullish forecast for oil prices as Middle East tensions rise

Current prices will incentivise US producers to increase production
Published: 19:41 April 15, 2018
Gulf News
Fareed Rahman, Senior Reporter


Abu Dhabi: Oil prices are expected to rise further due to geopolitical tensions in the Middle East and a drawdown in the global oil inventories, analysts said on Sunday.

“Increased geopolitical risk is certainly going to be a bullish factor for crude prices in the near term even if there is little direct impact to oil production from the US strikes on Syria,” Edward Bell, commodity analyst from Emirates NBD told Gulf News.

Western powers led by US fired as many as 105 missiles against Syria to dismantle its chemical weapons programme over the weekend, raising concerns about a potential supply squeeze in the region should the conflict blow out of proportion.

Brent, the global benchmark, was trading at $72.58 (Dh266) per barrel, up by 0.78 per cent, and the West Texas Intermediate was at $67.39 per barrel, up by 0.48 per cent, when markets closed on Friday.

“Prices may have more to go in the current market conditions as the strikes are occurring just as the IEA (International Energy Agency) affirmed that Opec has more or less achieved its objective in drawing down global inventories,” he added.

Oil producers led by Saudi Arabia and Russia are cutting production by about 1.8 million barrels a day in order to help lower global oil inventories and prop up prices under a deal that is to expire at the end of 2018. Oil prices have risen substantially since the agreement came into effect early last year.

Compliance

Echoing similar views, Benjamin Lu, commodity analyst from Phillip Futures in Singapore said the markets have been extremely bullish on prices due to a glowing Opec (Organisation of the Petroleum Exporting Countries) report on oil fundamentals along with escalating tensions in the Middle East.

“Opec reports have demonstrated for robust levels of compliance within the preset production parameters,” he told Gulf News adding that OECD (The Organisation for Economic Cooperation and Development) commercial stock levels have declined and are currently standing at 43 million barrels above the 5 year average.

“A revision in forecasted global oil demand levels have kept prices up too for most of the week.”

He, however said that current prices will incentivise US producers to increase production and put pressure on oil prices.

Rig count in the US has gone up by five to 1,008 rigs last week, according to a weekly report from Baker Hughes, a GE Company.

[florenceorbis] 15/4/2018 19:00

Yes ian, thus my comments

so one should not expect a strong correlation as to share price movements over the short to medium term as some seem to do

results awaited with much excitement and expectation

[ianood] 15/4/2018 18:06

florenceorbis - don't you think any major producer is going to have a rolling forward book , possibly out to two years? One things certain it aint all sold on the spot market!

[florenceorbis] 13/4/2018 18:50

Royal Dutch Shell Subsidiary Lowers Stake in Indian Gas Company
April 13, 2018, 11:14:37 AM EDT By MT Newswires, MT Newswires

Shutterstock photo

Royal Dutch Shell (RDS.A, RDS.B) subsidiary BG Asia Pacific Holdings has reduced its stake in Mahanagar Gas by 8.5% to 24% as part of the company's "ongoing portfolio optimization to transform Shell into a simpler company, delivering stronger returns," according to a company statement.

India's Mahanagar Gas retails compressed natural gas to automobiles and piped cooking gas to homes in Mumbai and adjoining areas.

In addition to Shell, GAIL India owns a 32.5% stake in Mahanagar, the government of Maharashtra owns 10% with the remaining 25% owned by public shareholders.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

[florenceorbis] 13/4/2018 18:50

All will be made known on 26th april

[florenceorbis] 13/4/2018 18:03

SHELL might have already sold forwarded its oil at a lower price thereby locking in
trading profits

[montyhedge] 13/4/2018 17:55

Shell seems to be missing the oil price rise party, thought this would be over 2500p by now.

[ianood] 13/4/2018 08:42

Ariane Good post, I reckon the carry across would be damn nigh identical - bodes well. Not sure how similar the ERMI would be ?

[ariane] 13/4/2018 07:49

COULD THERE BE SIMILAR INDICATORS FOR SHELL

[ariane] 12/4/2018 22:18

Shell To Shift From Oil ‘When This Makes Commercial Sense’
By Tsvetana Paraskova - Apr 12, 2018, 2:00 PM CDT Shell truck

Shell outlined on Thursday its strategy for the coming ‘energy transition’ decades, saying that it will still sell the oil and gas the society needs, while adapting its portfolio to lower-carbon energy, “when this makes commercial sense.”

In its Energy Transition Report published today, the supermajor said that there is a low risk of its oil and gas assets being left stranded, expecting around 80 percent of its current proved oil and gas reserves to be produced by 2030, and only 20 percent after that time.

“We conclude there is a low risk of Shell having stranded assets, or reserves that we cannot produce economically, in the medium term,” the oil and gas giant said.

Shell has three scenarios about the possible paths the world will take on the energy transition road. The three scenarios—Mountains, Oceans, and Sky—assume various levels of government support and collaboration toward a lower-carbon future. Mountains and Oceans scenarios fall short of the temperature goal of the Paris Agreement, while the latest scenario, Sky, “builds on this earlier work and assumes that society takes actions so as to meet the Paris goal,” Shell said.

Sky is the scenario assuming the most rapid transition which is “a challenging but technically possible and economically plausible pathway for the world to achieve the temperature goal of the Paris Agreement.”

In the Sky scenario, Shell sees oil demand growing 1 percent per year between 2020 and 2025. In this scenario, oil demand “peaks around the middle of the decade and then falls by about 1% per year until about 2040,” said Shell, but also noted:

“In all three scenarios, investment in new oil and gas production will be essential to meet ongoing demand. That’s because demand for oil and gas shrinks more slowly than the natural decline in production from existing oil and gas fields under any credible scenario.”
Related: Strong Demand, Not OPEC, Is Pushing Oil Prices Higher

In the short term, between 2018 and 2020, Shell plans capital investment of US$25-30 billion per year, “with the option to go below the lower end of the range but with the communicated commitment to not go above the higher end.”

Of those annual investments, the highest amount is earmarked for deepwater—US$5-6 billion annually, followed by oil products, conventional oil and gas, and integrated gas, each with US$4-5 billion of yearly investment. Shell will invest US$2-3 billion annually in shale until 2020, as it is also looking for projects with shorter payback periods, such as its shale investments in the U.S., Canada, and Argentina. A total of US$1-2 billion is earmarked for investment in Shell’s New Energies division until 2020.

The supermajor’s report comes a week after Friends of the Earth Netherlands vowed to take Shell to court if it doesn’t act on demands to align its corporate strategy with the global climate objectives.

By Tsvetana Paraskova for Oilprice.com