Share Name Share Symbol Market Type Share ISIN Share Description
Royal Dutch Shell Plc LSE:RDSB London Ordinary Share GB00B03MM408 'B' ORD EUR0.07
  Price Change % Change Share Price Shares Traded Last Trade
  37.80 2.77% 1,400.20 8,664,022 16:35:28
Bid Price Offer Price High Price Low Price Open Price
1,400.60 1,401.00 1,401.40 1,380.00 1,380.00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Oil & Gas Producers 132,052.62 -19,723.45 -203.33 51,894
Last Trade Time Trade Type Trade Size Trade Price Currency
18:28:24 O 10,323 1,392.856 GBX

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Royal Dutch Shell Daily Update: Royal Dutch Shell Plc is listed in the Oil & Gas Producers sector of the London Stock Exchange with ticker RDSB. The last closing price for Royal Dutch Shell was 1,362.40p.
Royal Dutch Shell Plc has a 4 week average price of 1,283.60p and a 12 week average price of 1,280.20p.
The 1 year high share price is 1,523p while the 1 year low share price is currently 845.40p.
There are currently 3,706,183,836 shares in issue and the average daily traded volume is 13,784,691 shares. The market capitalisation of Royal Dutch Shell Plc is £51,893,986,071.67.
adrian j boris: masterinvestor Can the Shell and BP share prices recover after underperforming the FTSE 100? By Robert Stephens, CFA 10 June 2021 2 mins. to read Robert Stephens, CFA, discusses the outlook for the UK’s two oil majors after a disappointing year. The performances of BP (LON: BP) and Shell (LON: RDSB) have been hugely disappointing over the past year. While the FTSE 100 index has surged by around 10%, the share prices of the two oil and gas majors are down by 12% apiece. A key reason for their underperformance of the index could be concerns about their reliance on fossil fuels. Covid-19 appears to have accelerated the trend towards cleaner forms of energy, as well as increasing the popularity of ESG investing. Oil and gas prospects However, the prospects for the oil and gas industry may be more positive than the share price performances of Shell and BP would suggest. Certainly, demand for oil and gas will decline over the coming decades, as major economies, including the UK, target net-zero emission targets. However, in the short run, the outlook for oil and gas could be encouraging for two reasons. First, the global economy is widely forecast to deliver strong growth in 2021 and 2022. According to the IMF, it is expected to grow by 6% this year and 4.4% next year. Historically, oil prices have been positively impacted by buoyant economic performance. The asset may even become more popular among investors who are searching for an inflation hedge should economic growth cause a rapid rise in the price level. Second, the adoption of cleaner forms of energy is likely to be an evolutionary process, rather than a revolution. There is no guarantee that current targets, which are ambitious in many cases, will ultimately be met. Indeed, the International Energy Agency (IEA) forecasts that demand for oil will be 4.4% higher in 2026 than it was prior to the pandemic. Alongside this, the shift within the energy sector from fossil fuel to low-carbon assets may mean that the supply of oil is somewhat limited. This could have a positive impact on its price. Attractive valuations Shell and BP have ambitious strategies to pivot towards low-carbon assets over the long run. In reality, the cost, returns and ultimate success of those plans is likely to remain a known unknown for a prolonged period. They could provide investors with high and sustainable returns over coming decades. Or they may leave both companies crippled with high levels of debt and asset bases that offer lower returns than have been previously available via fossil fuel assets. In this latter scenario, the ability of the two companies to deliver dividends or share price growth could be severely limited. However, the valuations of the two stocks suggest that investors are factoring in a period of financial difficulty and risk as they embark on their strategy shift. Shell has a price-to-book ratio of 0.9 and a dividend yield of 3.5%, while BP trades at just a 20% premium to net asset value and offers a dividend yield of 4.8%. These figures suggest that the two stocks offer wide margins of safety that may not reflect their potential to deliver improved financial performance should the oil price rise in the likely global economic recovery. They may also price in a failure to pivot towards low-carbon assets that does not materialise. As such, they could offer good value for money on a risk/reward basis relative to other FTSE 100 stocks in the current bull market.
florenceorbis: 07/06/2021 7:00am UK Regulatory (RNS & others) TIDMRDSA TIDMRDSB The Hague, June 7, 2021 - The Board of Royal Dutch Shell plc ("RDS") today announced the pounds sterling and euro equivalent dividend payments in respect of the first quarter 2021 interim dividend, which was announced on April 29, 2021 at US$0.1735 per A ordinary share ("A Share") and B ordinary share ("B Share"). Dividends on A Shares will be paid, by default, in euros at the rate of EUR0.1426 per A Share. Holders of A Shares who have validly submitted US dollars or pounds sterling currency elections by May 28, 2021 will be entitled to a dividend of US$0.1735 or 12.26p per A Share, respectively. Dividends on B Shares will be paid, by default, in pounds sterling at the rate of 12.26p per B Share. Holders of B Shares who have validly submitted US dollars or euros currency elections by May 28, 2021 will be entitled to a dividend of US$0.1735 or EUR0.1426 per B Share, respectively. Euro and pounds sterling dividends payable in cash have been converted from US dollars based on an average of market exchange rates over the three dealing days from 2 June to 4 June 2021. This dividend will be payable on June 21, 2021 to those members whose names were on the Register of Members on May 14, 2021. Taxation - cash dividend Cash dividends on A Shares will be subject to the deduction of Dutch dividend withholding tax at the rate of 15%, which may be reduced in certain circumstances. Non-Dutch resident shareholders, depending on their particular circumstances, may be entitled to a full or partial refund of Dutch dividend withholding tax. If you are uncertain as to the tax treatment of any dividends you should consult your tax advisor. Note A different currency election date may apply to shareholders holding shares in a securities account with a bank or financial institution ultimately holding through Euroclear Nederland. This may also apply to other shareholders who do not hold their shares either directly on the Register of Members or in the corporate sponsored nominee arrangement. Shareholders can contact their broker, financial intermediary, bank or financial institution for the election deadline that applies.
planit2: Sentiment on here is terrible and hit rock bottom, got to be a good sign for the future share price as once we have run out of sellers the price will rally. :) Unless you have to sell then the share price is just an opportunity to pick up shares cheaply. In the mean time you own a part of a company that makes money off the oil price. Last time I looked the oil price was higher than could be believed this time last year. This is going to be a very profitable year. Shell lost money with bad hedging in Q1 but this won't be repeated in Q2 so the price might gain a bit on BP (who cleaned up with their trading in Q1). For the medium term you need to look more at supply and demand, no new development (banks don't want to lend, gov shutting it down etc) means constrained supply so the people with the resources will do very well. I dont even see the court case as a bad thing. All it does is force Shell to be a huge Energy company by 2030 with 45% of their energy production being green. With the cost of energy rising hugely (it has to because green costs more) it should all be very profitable for Shell. Not advice, DYODD etc.
yousif: I share your concern (bb) regarding the the current share price. I added to my holdings a year ago at today’s current price. It is certainly lagging behind BP for no obvious reasons. I am waiting to add more in case of further weakness. The sector as you know is out of favour especially RDS. I remember the same thing happened in 2015/16 and share price was down to £14-15 but eventually recovered to mid high £20s. Patience is, in my opinion, the rule of the game especially when investing in super big companies. The above is only my opinion and not a recommendation to buy or sell.
waldron: Oil Giants Recover as Prices Rebound -- Update 04/30/2021 | 03:27pm BST By Christopher M. Matthews Big oil companies returned to profitability during the first quarter as they recovered from the unprecedented destruction of oil and gas demand wrought by the coronavirus pandemic. Exxon Mobil Corp. reported $2.7 billion in net income Friday, its first quarterly profit since the pandemic erupted last spring, while Chevron Corp. reported $1.4 billion in first-quarter profit. The results were boosted by rising oil prices during the first months of 2021, as countries around the world soften coronavirus quarantines. The largest European oil companies, BP PLC, Royal Dutch Shell PLC and Total SE, all reported profits earlier in the week after enduring huge losses last year. "That recovery, which we had anticipated happening at some point in time, is happening sooner than we anticipated," Exxon Chief Executive Darren Woods said in an interview Friday. "As economies are reopening and rebounding quicker, in some places, than expected, we are seeing a demand response." Oil companies endured one of their worst years on record in 2020, as Covid-19 lockdowns choked off demand for oil and gas as road and air traffic fell precipitously. Exxon reported its first annual loss in modern history in 2020 of about $22 billion. But cautious optimism has been mounting that global economic activity could return to pre-pandemic levels later this year as vaccines become more widely available around the world. Chevron Chief Financial Officer Pierre Breber said that demand for gasoline and diesel was nearly back to pre-pandemic levels, and that jet fuel is the last remaining overhang, with strong signs that domestic air travel in the U.S. is picking up. "As we look forward, the next couple of quarters look very good," Mr. Breber said in an interview. "We feel good about our ability to generate cash." Chevron's net income was down about 62% from the same quarter last year, but was a substantial increase from a $665 million loss in the previous quarter. Exxon's $2.7 billion profit compared with a $610 million loss a year ago. BP's profit more than tripled from the previous quarter to nearly $4.7 billion, and Shell reported a profit of almost $5.7 billion. Share prices for the world's largest energy companies have moved in tandem with oil prices that have rebounded markedly in recent months. U.S. oil prices are up nearly 80% over the past six months, while the shares of Exxon, Chevron, BP and Shell are collectively up about 65%. On Thursday, U.S. oil prices neared a six-week high of about $65 a barrel but fell around 2.5% in early trading Friday as traders eyed a build in crude and gasoline stockpiles. The share prices of Exxon, Chevron, BP and Shell were collectively down nearly 2% in early trading Friday. The optimism about oil and gas demand rebounding is being tempered by concerns about rapidly rising Covid-19 case numbers in India and South America, said Bjornar Tonhaugen, an analyst at Rystad Energy. Reduced economic activity in India alone may sap as much as 900,000 barrels of oil a day from global demand, according to Rystad. "For the moment optimism is helping prices, but every trader's eyes are on India," Mr. Tonhaugen said. "The oil bulls are out again but it's doubtful that they are having a confident and calm sleep." In response to growing profits, Chevron, BP and Shell boosted their payouts to investors. On Wednesday, Chevron increased its quarterly dividend by 4%, while Shell also raised its dividend 4%, the second increase since slashing it last year. BP said it would buy back $500 million of shares. Total and Exxon held their dividends flat. The weeklong freeze in Texas that left millions without power in February affected profits for many of the companies, which both produce oil in the state and own plants there to convert the hydrocarbons into fuels and plastics. Chevron's refining and chemical units reported $5 million in profits, down from $1.1 billion a year ago, which Chevron CEO Mike Wirth attributed to the February storm and continuing impact of the pandemic. In total, the storm cut about $300 million from its profit, Chevron said. Exxon said the extreme weather reduced earnings by nearly $600 million. Meanwhile, analysts attributed the strong performance of BP's trading unit to its ability to capitalize on substantial price fluctuations during the storm. Despite the improving conditions, Chevron has pledged to keep capital expenditures austere. Mr. Wirth said capital spending decreased 43% from last year during the quarter, citing its corporate restructuring last year that saw as much as 15% of its workforce laid off. Exxon also has pledged fiscal restraint, saying its plan to cut annual capital spending by about 30% remains unchanged. Some investors are deeply skeptical of the industry notwithstanding climbing commodity prices, according to Paul Sankey, an independent oil and gas analyst. Most of the companies' share prices are still trading below their pre-pandemic levels as investors evaluate the firms' plans to navigate tightening global regulations on carbon emissions. Earlier this month, President Biden pledged to cut U.S. emissions by about 50% from 2005 levels by 2030, targeting greenhouse gases from power plants, buildings and the transportation sector. Mr. Woods said Friday that Exxon is engaging with officials on climate policy and has urged the government to set a price on carbon, which it says would spur investment in carbon-reducing technologies. Mr. Sankey said the industry delivered poor results for years from their core oil business before the pandemic, leaving some to doubt they can reap profits from renewable energy or technologies to reduce carbon emissions, which some of the companies have promised to do. "Their track record is not good enough for them to get into a new theme, because they did so poorly on the old one," Mr. Sankey said. Write to Christopher M. Matthews at (END) Dow Jones Newswires
waldron: Oil price boost should see BP Q1 profits gush The 25 per cent-plus rise in oil prices seen since the start of 2021 should help BP’s profits surge when it reports first-quarter results this week. By Perry Gourley and August Graham Sunday, 25th April 2021, 7:00 am Analysts expect the company's replacement cost profit, its preferred measure, to reach £1.2 billion compared to £569 million in the same period last year. Since the start of the year the price of a barrel of Brent crude oil has risen strongly and has trebled since a low point a year ago. Steve Clayton, manager of the HL Select Funds, said: "With oil prices having built on their 2020 recovery throughout the first three months of the year, BP should have had a reasonable trading environment to report when it posts first-quarter numbers." The price of Brent averaged around $61 (£44) a barrel in the first quarter, compared to $44 a quarter earlier, and $50 in the first three months of 2020. However, shares in BP and rival Shell, which also reports next week, have not bounced back as strongly as many expected. BP's shares have only gained 16 per cent since their worst days in March 2020 and are still more than 40 per cent down from their pre-pandemic levels. Shell, which in January announced it was cutting 300 Aberdeen jobs, meanwhile is up just 27 per cent from March 2020 and also around 40 per cent down since January 2020. AJ Bell investment director Russ Mould said investors are “clearly sceptical” over the two majors’ shift to a lower carbon business model. The companies' share prices will also not have been helped by cutting dividends, the first time since the Gulf of Mexico oil spill for BP, and the first time since the Second World War for Shell. "Some contrarians may see this as an opportunity, given how sentiment toward the sector is so washed out, how badly the stocks have performed, the possibility of an economic upturn, and the likelihood that oil will be with us as a primary source of energy for some time to come, whether we like it or not," Mr Mould said. He added that analysts will also focus on BP's production figures when the results come out on Tuesday.
spud: Shares for this oil major fell over 40% in 2020 but are up by more than 5% in 2021. Buy, sell or hold? First-quarter guidance and update ii round-up: Oil giant Royal Dutch Shell B RDSB today flagged a hit of up to $200 million on its adjusted first-quarter earnings given the impact of extreme winter weather conditions on its US Texas operations. Sales volumes under the ongoing pandemic are expected to be between 3.7 and 4.7 million barrels per day, less than the 4.78 billion sold during the prior fourth quarter. Shell shares rose by more than 1% during UK trading, leaving them up by over 40% since late October and just prior to the announcement of vaccine development success. Shares for rival BP are up by more than 50% over the same time. Adjusted earnings for Shell’s upstream exploration business are expected to prove positive during the quarter given the recent upturn in energy commodity prices. The oil price is up by around a fifth year-to-date. Trading and optimisation results for its integrated gas division are expected to be significantly below average. Total production of between 920 and 960 thousand barrels of oil equivalent per day compares to the 942 thousand barrels achieved in the fourth quarter. Shell reported a loss of $21.7 billion for the full-year 2020, hit by a supply dispute between Saudi Arabia and Russia and significantly reduced energy demand under pandemic lockdowns. In the autumn, management announced up to 9,000 job losses as it looked to transform towards becoming a low-carbon energy producer. A move accelerated by the global pandemic. Earlier in 2020 it also cut the dividend for the first time in decades. First quarter 2021 results are scheduled for the 29 April. ii view: Profit margins are lower in the power and renewable energy sectors, areas Shell is now looking to focus on as it pushes towards low-carbon fuels. As such, reducing organisational complexity and providing a more efficient and lower cost base is now vital as its looks to compete with both existing players such as SSE SSE 1.03% and other oil majors like BP moving in a similar direction. Previous business disposals have inevitably had an impact on production numbers and therefore income. Today’s latest update is also a reminder that the weather can also play its part. For investors, debt of over $70 billion as of its last full-year results underlines the need for more cost cuts and potential further disposals to help balance the books. Previous write-downs in business asset values and the 2020 cut to the dividend payment were also not good news, if arguably required for Shell to reset its strategy. But formed in 1907, Shell’s long track record of dealing with volatile energy demand and prices is not to be ignored. And, despite its first dividend cut since the Second World War, an estimated dividend yield of over 3.5% is still attractive in today’s ultra-low interest rate environment. In all, and with analysts currently estimating a fair value share price of around £17.44, Shell’s position as a core portfolio constituent still looks deserved. Positives: Rebased but sustainable dividend payment Previous purchase of BG Group improved both its product diversity & climate change credentials Negatives: The weather can raise operational challenges Competition in its new focused arena is increasing The average rating of stock market analysts: Strong buy spud
spud: Shell Warns Oil-Price Gains Partly Offset by Hit From Texas Freeze -- UpdateSource: Dow Jones NewsBy Sarah McFarlane LONDON -- Royal Dutch Shell PLC said gains it made from higher oil prices in the first quarter would be partly offset by disruption related to the winter storm in Texas, knocking the energy giant's recovery from the pandemic.The company said Wednesday that the cold snap had hurt its production, refining and chemicals operations in the state, and would reduce earnings by around $200 million.The unusually cold weather left millions of Texans without power and resulted in outages at refineries and chemical plants, disrupted pipeline flows, and froze oil and natural-gas wells.Despite the disruption, Shell and other big oil companies are looking to mount a recovery this year after reporting some of their worst results on record for 2020. Covid-19 lockdowns sapped demand for oil, sending prices lower, prompting Shell and its peers to reduce costs, shrink workforces and cut dividends."In actual results the turning point will more likely be the second quarter," said Jason Kenney, an analyst at Spanish bank Santander, adding that energy companies' profitability should continue to improve in the second half of the year given cost cutting and the higher oil prices.The benchmark Brent crude price has risen around 20% since the start of the year, boosted by a recovery in oil demand, although demand isn't yet back at pre-pandemic levels with lockdowns continuing in some parts of the world.Earlier this week, BP PLC said higher oil prices, strong trading results and income from asset sales had helped it hit its debt-reduction target early, signaling a recovery from the pandemic was within sight.However, Shell said it expected mixed trading results for the quarter. Trading results aren't dependent on the direction of energy prices, and rather can rise or fall as a result of price volatility based on how successfully traders exploit price changes.Liquefied-natural gas prices were particularly volatile early in the year, when cold weather, combined with outages at some plants, pushed prices to record highs. Shell said the price volatility had a limited impact on its earnings.Shell said its refining and chemicals margins improved in the first three months of the year compared with the fourth quarter last year, but warned that activity at plants was lower than it had projected in February."Operationally, the business appears to be performing below expectations, with oil products and chemical utilization and volumes clearly below guidance," said Biraj Borkhataria, an analyst at RBC Capital Markets. The exception was integrated gas production, which was higher than the previous guidance, he added.Shell's shares were 0.6% higher in morning trading in Londospud
sarkasm: Don't Sell Shell Feb. 04, 2021 5:24 PM ETRoyal Dutch Shell plc (RDS.A), RDS.BRYDAFRYDBF1 Comment2 Likes Summary Shell's dreadful stock price action in 2020 is coming to an end. All the bad news has been priced in and the stock offers good value now. Oil fundamentals look supportive but even with flat oil prices, Shell's financials look to be getting stronger, providing strong dividend cover. The Strategy Day on 11th February could offer a catalyst for investors to reconsider Shell as a serious Energy Transition investment option. The December 21st trading update from Royal Dutch Shell (RDS.A) largely foresaw the torrid Q4 results and 2020 full year results just released. In a nutshell, 2020 was an exceptionally challenging year for the oil major. What should Shell shareholders do? While the company is trying to reposition itself for the new energy landscape ahead, the headlines have been consistently bad for the Anglo-Dutch company. Profit warnings, write-downs, collapsing prices for oil, collapsing refinery margins, the first cut in dividends for decades, a falling share price, and finally the departure of several clean energy executives amid internal arguments over its clean energy strategy have all contributed to the bear market in Shell's stock in the last year. The 36% fall in the stock price over the last year sounds bad, but there is a fundamental truth in oil markets and that is that the cure for low oil prices is low oil prices. That’s why the weakness in the sector, the cutbacks in production and investment will cause higher oil prices going forward, as I have already pitched in a recent Seeking Alpha article on crude oil, that so far is playing out nicely. The pessimism about Shell, coupled with some positive signs on the horizon and my bullish outlook on oil in fact make Shell a very good contrarian play. The fact that December’s profit warning did not do much damage to the share price suggests that all the bad news is already priced in and indeed the stock has started to rise over the last couple of months. The Global Investor thinks this recent price action isn’t a dead cat bounce, but the start of a rally back to a fairer, higher price for Shell's stock. Oil majors have traditionally been core income stocks for many portfolios but after the first dividend cuts in decades last year, when the dividend was cut 66% it has since been raised slightly in October and now been raised again slightly some more. This gives the stock a current dividend yield of about 3.6%. What’s more, Shell is still slashing costs and capital expenditure, like the rest of the oil and gas industry, and US shale output is falling thanks to weak pricing. This suggests low prices will squeeze out uneconomic supply and help oil prices continue their recovery. And with the rollout of vaccination programs, some oil demand lost in 2020 should come back in 2021, further tightening the supply-demand balance towards higher oil prices. Another contrarian indicator is that the oil and gas industry is now hated by institutional investors, either for financial reasons or for environmental, social and governance - ESG - reasons and this has simply gone too far. The weighting of the Oil & Gas sector in the main stock market indexes is at lows last seen in the 1990s when oil prices ranged from $10-$20 per barrel. Risks This brings us to the risks of owning Shell right now. ESG is a new force in the markets, so some investors simply won’t look at Shell for a long time. Long-term oil demand has probably peaked and the switch to renewable sources of energy will be bumpy as the company is finding in its transition efforts to date. Shell also has the risk that it gets stuck with “stranded assets” with its large reserves of oil and gas. This means Shell’s book value is bound to be higher than its market value as investors price in further write-downs to its asset values. Shell has traditionally been a very reliable dividend payer, but the energy transition makes it almost impossible to balance the needs of high dividend payouts with the large investments required in greener energies. While the dividend has been cut deeply to a lower level, investors cannot assume it will rise back to its previous level quickly as the volatility in energy markets and the restructuring needs of Shell will probably dictate otherwise. Indeed, Shell's management has called it a dividend "reset". The future It is expected that Shell will outline a radical new strategy at its investor day scheduled for February 11th. The new strategy, likely to focus on clean energy, and to more closely follow BP’s radical restructuring plans that started last year, could appeal to investors who are looking more at the rate of change in ESG factors than in the absolute level of how good a company is on current ESG measures, specifically with respect to climate change and carbon emissions. Strategy Day on February 11th Ultimately, The Global Investor expects Shell to try to strike a balance between driving meaningful change towards 'Net Zero' emissions but also to maximize value from existing businesses over the intermediate period. The following are some of the topics I expect Shell to cover in the forthcoming Strategy Day which I expect to help turn market sentiment back towards Shell’s favor. Net zero by 2050 or earlier – Shell already outlined this target back in April last year but didn’t give much detail and so wasn’t seen as that credible. Shell will probably present its business plan in more detail to get to these targets. Upstream oil & gas to underpin cash generation. Having made the mega acquisition of gas major BG Group back in 2016, Shell is more committed to oil & gas than BP who have outlined plans to cut production by 40% over the next decade. Given Shell's project pipeline, its portfolio still has some growth potential but during last year’s Q3 results CEO Ben van Beurden said "It’s probably fair to say that 2019 was the high point in terms of oil production". So Shell is probably keen to keep a relatively flat production profile as it looks to sell non-core positions as it uses its Upstream division to act as a key contributor to cash generation over the next decade, through both operations as well as disposals. While this might disappoint ESG investors who argue for more aggressive action, it will keep dividend investors happy as this strategy reduces risks to free cash flow generation. Strength in natural gas, the bridge fuel. Shell is the world’s largest player in LNG so it’s likely Shell will highlight the role of natural gas as the “transition fuel” helping reduce carbon emissions because of its cleaner properties compared to coal and its vital role in electricity generation. The term "bridge" comes about because natural gas can support renewables over the period where wind and solar still suffer from intermittency issues. In 2019 Shell said it expected the LNG market to grow at 4% per year over the next few years. Last year management said Shell’s LNG business will not necessarily match the market "percent for percent" which might mean lower capex needs in this division. LNG will remain a key cash generator over the next decade so expect updates on Shell’s LNG outlook on 11th February. Growth opportunities in hydrogen and biofuels. For renewables, Shell will likely emphasize both hydrogen and biofuels given hydrogen is a natural fit as it is already produced and consumed in Shell’s refining business. Shell already has about 50 hydrogen fueling stations mostly in Germany and California. In biofuels, Shell is one of the largest blenders and distributors globally, partly due to its 50:50 joint venture with Raizen in Brazil. Shell will likely highlight its expansion in wind and solar, businesses which are getting extremely competitive now. Shell will look to leverage its strong Marketing and Trading positions to sell more electricity to the customers who currently buy fossil fuels from their large global customer networks. New Energies to account for about 25% of capital expenditure over the next few years. At last year’s 3Q earnings announcement, Shell guided that capex would remain in the $19-22 billion range over the coming years. It gave high level guidance on the breakdown between segments: 35-40% for Upstream, 35-40% for “Transition business”, which includes Integrated Gas, Chemicals and Refining, and about 25% to growth businesses such as Marketing, Power, Hydrogen, Biofuels and carbon capture, utilization and storage with nature-based solutions. The Global Investor expects Shell to update this breakdown and give more detail. Overall, hydrocarbons will remain part of Shell’s core strategy over the next decade. This gives it less execution risk on restructuring compared to its great rival BP, but makes it more exposed to oil and gas commodity prices. While ESG investors do play a role at the margin, and maybe a larger role in Europe, The Global Investor still believes the stock market is overall, at least in the long term, amoral. Short term trends matter and ESG has driven investors away from oil & gas but it could also be argued that that’s mostly happened because of weaker financial returns in the sector. If Shell can raise its profits through higher oil prices, Shell can raise its dividends and investors will put a higher valuation on the stock because of higher dividends. Dividends So, it comes back to dividends ultimately. That has always been the driver of Shell’s share price. Assuming oil prices at about $50/bbl over the next few years – more conservative than my actual view – I think Shell will generate $13-14 billion in free cash flow each year. At current dividend levels this implies dividend cover of about 2.5x, a very high number for Shell historically. This means Shell's balance sheet will start to de-leverage quickly. Management has indicated that when net debt falls to about $65 billion it will re-start its share buyback program. This could happen around the middle of next year if oil prices hold. Currently, Shell is guiding for 4% dividend growth per year, but there is big upside potential to this number. Before the dividend reset last year, Shell’s dividend had become unstainable given the investment needed in the energy transition. Valuation Shell’s dividend yield over the last 10 years had bounced around the 6% level as it was always assumed the dividend was unstainable. After the reset a much lower more sustainable dividend yield would be more like 3.5% or 3.6%. Taking 3.6% to be conservative, and a forecast full year 2022 dividend of $1.39 per share for the “A” class ADRs would give us a stock price of about $39, or about 6% higher than where it is at the time of this writing. While this isn’t massive upside, the dividend yield of 3.6% and dividend growth of 4-5% per year offers us good stability. All this assumes conservative oil price forecasts and gives Shell ample room to de-lever and increase share buybacks or accelerate dividend growth, which should further put a bid on the stock price. Conclusion Value investors and income seekers should continue to own Shell. Shell is very likely to always be a “Supermajor221; but with its focus shifting gradually towards energy in general and away from its historical reliance on oil but gas will play a major role for a long period. Energy is a core need in society so Shell is likely to be able to keep its large size and retain its status as a core “income portfolio” position thanks to strong and stable dividends. In the short term, rebounding oil prices should help near term cash flows and hence drive stock price appreciation. A successful investor day on February 11th could help change Shell’s perception amongst the sustainable investment crowd and market sentiment towards companies through lowering the climate / sustainability / reputational risk for institutional investors in owning Shell. This sustainability focus for investors accounts for a very large section of European institutional investors now. So things are improving now and it's likely we've seen the low in the Shell share price. The bottom line is that Shell is worth holding as a small part of your portfolio.
xxxxxy: Shell could end up paying top dollar for any assets it acquires and any capital investments could put pressure on cash flow and, in a worst-case scenario, raise fresh questions over the dividend.The thing that could do most to help is a positive surprise in oil prices, since that would boost cash flow. This could happen, especially if the pandemic is beaten, while analysis from Opec suggests that oil will still be the world's leading source of energy in 2045.We must consider the origin of that prediction but maybe oil assets are not quite as badly stranded as 2020's share price action would lead us to believe. That could have interesting implications for the cash flows and therefore the valuations of quoted oil producers.Value hunters and income seekers should hang on. Questor says: holdTicker: RDSBShare price at close: £12.59Russ Mould is investment director at AJ Bell, the stockbroker... Daily Telegraph
Royal Dutch Shell share price data is direct from the London Stock Exchange
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