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SHEL Shell Plc

-10.50 (-0.41%)
05 Dec 2023 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Shell Plc LSE:SHEL London Ordinary Share GB00BP6MXD84 ORD EUR0.07
  Price Change % Change Share Price Shares Traded Last Trade
  -10.50 -0.41% 2,526.00 14,689,702 16:35:24
Bid Price Offer Price High Price Low Price Open Price
2,529.00 2,529.50 2,546.00 2,511.00 2,522.00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Crude Petroleum & Natural Gs USD 381.31B USD 42.31B USD 6.3236 4.00 169.21B
Last Trade Time Trade Type Trade Size Trade Price Currency
18:11:58 O 11,016 2,526.00 GBX

Shell (SHEL) Latest News (1)

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Shell (SHEL) Discussions and Chat

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Date Time Title Posts
22/8/202312:11The man in the helicoptor4
07/2/202217:53You can be sure of Shell-
22/1/202220:14Stand up the true SHELL, Royal Dutch and or Transport3,063

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Shell (SHEL) Most Recent Trades

Trade Time Trade Price Trade Size Trade Value Trade Type
2023-12-05 18:12:142,526.0011,016278,264.16O
2023-12-05 18:12:002,530.5021,494543,905.67O
2023-12-05 18:03:322,525.207,492189,188.21O
2023-12-05 18:02:562,533.961764,459.76O
2023-12-05 18:02:552,522.2539983.68O

Shell (SHEL) Top Chat Posts

Top Posts
Posted at 05/12/2023 08:20 by Shell Daily Update
Shell Plc is listed in the Crude Petroleum & Natural Gs sector of the London Stock Exchange with ticker SHEL. The last closing price for Shell was 2,536.50p.
Shell currently has 6,690,611,000 shares in issue. The market capitalisation of Shell is £169,205,552,190.
Shell has a price to earnings ratio (PE ratio) of 4.00.
This morning SHEL shares opened at 2,522p
Posted at 20/10/2023 12:31 by adg
1. - really? What bit don’t you get?
Market cap is THE most relevant metric end of - actual share price is only half the story as it, multiplied by the shares in issue dictate the market cap - an all time high share price is only psychological milestone and that’s a fact - - mkt cap is ultimate and most meaningful measure (unless you don’t understand how it works - which I am not suggesting for one moment)
Posted at 14/6/2023 07:20 by charggg
And the share price reaction says it all. Bet Sawan and most of us were hoping we'd see a BP style 10% share price jump when moving back to oil and gas is disclosed.Shell needs to quit the London market as many have been suggesting. UK capital markets is a dinosaur and being part of the FTSE100 has been an absolute liability. Shell should be in S&P500 and watch the index related capital flow into Shell. FTSE100 is best avoided - look at the Ftse100 chart of the last 10 years plus. Do it Sawan - you can't please everyone. Get new US shareholders and let the European virtue signaling investors fight for crumbs."Does Shell need to quit London? A lot of brokers think so"
Posted at 08/6/2023 13:17 by jrphoenixw2
Questor column@Telegraph today:
'Commodity stocks such as this oil giant could be a useful hedge against inflation
Questor share tip: it is rare for oil demand to drop, even during recessions, and the company's shares look cheap.

This column makes no apology for returning to the subject of Shell so quickly after its last look a month ago. That came after May’s bumper first-quarter profits statement and the occasion this time is last weekend’s Opec+ meeting in Vienna.

Saudi Arabia’s attempts to bend the oil price to its iron may not be proving entirely successful, but there are still good grounds for thinking the oil price is well underpinned in the $70 to $80 a barrel range, enough for Shell to keep churning out dividends and share buybacks to income-seeking investors (even if climate campaigners and portfolio builders who run strict environmental, social and governance screens may despair).

The influence of Opec+ is not as great as investors might believe, given that the members of the oil producers’ cartel and its allies, such as Russia, control less than half of global oil production between them.

This may explain why oil traders are hardly running for cover even as Riyadh sanctions a cut in production of one million barrels of oil a day, or 1pc of global output, from July 1 and gets Opec+ to extend the 1.2m barrel a day cut announced in April into 2024.

Reports of dissatisfaction among other Opec members who are itching to increase output, notably Nigeria and Angola, may also be dampening the impact of the Saudi Arabian initiative.

An even bigger issue facing the oil price may be ongoing concerns over the possibility of a global recession, or at least a slowdown.

In this context it is intriguing to note that equity markets seem content to price in a so-called “soft landing” or even no recession at all, so either share buyers or oil traders are going to be wrong at some stage.

And if it is oil traders who are wrong, then heaven help them for two reasons.

First, oil demand could come in higher than expected. Second, traders have reportedly been building up short positions against crude, so if the price starts to go against them, they may need to buy oil to close out and that could give the commodity’s price a lift.

Once sentiment is so one-sided, it does not take much to get the price going in the other direction and while it is very hard for investors to gauge – other than by wading through the data provided by America’s Commodity Futures Trading Commission (CFTC) commitment of traders’ reports – the impact of traders’ positioning (and who is net long and net short) should never be underestimated.

The fundamentals for oil may not be as bad as the market seems to think.

It is rare for oil demand to drop, even during recessions, and whether we like it or not, hydrocarbons are likely to be a major source of energy for some time to come, as we seek to manage the transition towards a more renewable future and net zero by 2050.

It may therefore be unwise to underestimate demand, especially as the US has run down its strategic petroleum reserve to just 355m barrels, the lowest mark since 1983 and way below its 714m-barrel capacity.

Shell key facts
Market value: £152bn
Turnover: (Dec 23E): $343bn
Pre-tax profits: (Dec 23E): $47.8bn
Yield: (Dec 23E): 4.2pc
Most recent year’s dividend: (Dec 22): 86p
Net debt: (March 23): $81.8bn
Return on capital: (Dec 23): 24.6pc
Cash conversion ratio: (Dec 23): 68pc
p/e ratio: (Dec 23E): 6.5
For reasons of energy independence and national security it seems likely that the US will have to top up again at some stage.

However, growth in shale oil production in the US appears to be flattening out, especially in the key Permian basin, according to the Energy Information Administration, data that may inform the International Energy Agency’s forecasts that global hydrocarbon supply may grow more slowly than demand in 2023 (and demand is actually seen hitting a new all-time high).

Data from Baker Hughes show that active rig numbers in the US are down by more than 10pc from 2022’s highs, at 696, while the worldwide drop is 8pc to 1,783, compared with February’s high of 1,921. If demand keeps rising, there is a risk that there is not enough supply to meet that demand.

The result could in turn be sharp oil price increases, the last thing that traders seem to expect, although any such spike could lead to the demand destruction (and decisive action to secure new energy sources) that environmental campaigners crave, even if the price could be inflation.

Central banks can print money, but they cannot print oil when it is needed.

Meanwhile, consensus analysts’ forecasts of a drop in after-tax income at Shell in 2023, 2024 and 2025, suggest expectations are low. The shares also look cheap on a dividend yield of more than 4pc, a price-to-earnings ratio of less than seven and relative to £155bn in net assets.

Commodity stocks such as Shell could yet be a useful hedge against a sustained bout of inflation.

Questor says: Hold
Ticker: SHEL
Share price at close: £22.94
Russ Mould is investment director at AJ Bell, the stockbroker
Posted at 10/5/2023 16:37 by jrphoenixw2
Telelgraph/Questor today:
'Painful for some to admit it, but this stock remains an income staple

Questor share tip: investors prioritising dollars and cents will be pleased to see this giant pumping out cash

The bumper first-quarter profits published by Shell last week will upset environmental campaigners and many householders alike, especially those who are finding it hard to pay their bills or keep their car topped up.

Even global tax payments of $5.6bn (£4.5bn) in the first three months of the year – $2.1bn more than in the equivalent period in 2022 – may not assuage their fury.

But those investors who desire reliable income and are prepared to focus purely on dollars and cents, nickels and dimes rather than debate environmental, social or governance (ESG) issues, will be pleased to see the oil and gas giant pumping out cash.

Shell handed over $6.3bn via buybacks and dividends in the first quarter alone and annualising that equates to £20bn, or a cash yield in the double-digit percentage range.

That is probably the key number right now because Shell’s earnings do take some studying.

On the face of it, the business model of an oil major is easy enough to understand.

They explore and drill for and then produce hydrocarbons; they ship and refine them; they trade them; and they sell refined product at petrol stations or end-products like chemicals. Simple.

Quantifying how well they do this is a different matter and besides statutory measures such as pre-tax or net (after-tax) income, Shell also refers to earnings before interest, tax, depreciation and amortisation (Ebitda), adjusted Ebitda, adjusted earnings and earnings on a CCS (current cost of supply) basis, which excludes the effect of changes in the oil price.

To quote Ed Murrow, the American broadcaster: “Anyone who isn’t confused really doesn’t understand the situation.”

To cut through all of that, it may be simplest to look at net, or after-tax, income. In the first quarter, Shell reported net profit of $8.7bn, compared with $7.1bn a year ago.

That increase may seem odd, bearing in mind the average prices received by Shell for its oil and natural gas fell by a fifth and two fifths respectively from the first quarter of 2022 to the first quarter of this year.

But Shell booked a $3.9bn writedown on its Russian assets in the first quarter of last year, so profits were down this time compared with a year ago once that is taken into account, thanks to lower hydrocarbon prices, no great change in output and higher taxes.

That meaty net profit figure more than covers the dividend, which equates to a 3.9pc forward dividend yield, according to analysts’ consensus estimates, and the buyback.

As such, it forms the main plank of any investment case for the stock, even if any portfolio-builder who runs strict ESG screens is likely to be unmoved and stick to their own personal principles, especially if they believe oil firms to be profiteering.

The sheer scale of the net profit number inevitably raises that issue.

This column, however, views commodity producers as price takers rather than price givers, by the very nature of their business – a commodity comes with little or no differentiation, by definition, so the supplier’s key tools to attract buyers are efficiency of production and price.

And there are so many influences on the oil price, ranging from global economic growth to geopolitics and sanctions, environmental pressures, the role of Opec and more.

Shell key facts
Market value: £162bn
Last full-year dividend (Dec 22): 86p
Yield (Dec 23E): 3.9pc
Turnover (Dec 23E): $346bn
Pre-tax profit (Dec 23E): $46.1bn
Net debt (Mar 23): $81.8bn
Return on capital (Dec 23): 24.6pc
Cash conversion (Dec 23): 68pc
PE ratio (Dec 23E): 7.0x

Shell probably has more influence on price for refined products, especially those for sale on petrol station forecourts, although drivers will do their best to shop around.

The company’s acknowledgement that trading of crude oil, refined products and petrochemicals contributed strongly to first-quarter earnings is harder to defend against profiteering claims, and campaigners will be pleased, in this context, to see the increased tax charge.

The debate is unlikely to die down and may only recede if oil and gas prices go lower and drag Shell’s earnings with them.

That remains a key risk to the share price and any falls here could offset the benefits of the income, if an investor is obliged to sell the paper at an inopportune moment and has to crystallise any losses.

Fears of a recession leave Brent crude back near $70 a barrel, so the effect of Opec’s April production cut is proving short-lived (to perhaps show how hard it is to profiteer and bend a global market like oil to anyone’s will).

But analysts are already forecasting decreases in net income in 2023, 2024 and 2025, so this is hardly news. The shares look cheap on yield and relative to the company’s £155bn in net assets, while a forward price-earnings ratio of seven looks undemanding. Shell remains an income staple.

Questor says: hold
Ticker: SHEL
Share price at close: £23.76
Posted at 04/5/2023 06:36 by gibbs1
Oil giant Shell beats expectations with $9.6 billion in first-quarter profit

Published Thu, May 4 2023
2:07 AM EDTUpdated 9 Min Ago

Sam Meredith

British oil giant Shell on Thursday posted stronger-than-anticipated first-quarter profit, extending a record run of bumper results after commodity prices surged in 2022 following Russia’s full-scale invasion of Ukraine.

Shell reported adjusted earnings of $9.6 billion for the first three months of the year, comfortably beating analyst expectations of $8.6 billion, according to Refinitiv.

The company posted adjusted earnings of $9.1 billion over the same period a year earlier and $9.8 billion for the final three months of 2022.

Shares of the oil major are little changed year-to-date.

Flush with cash, Shell held the rate of its share buyback program steady at $4 billion over the next three months and kept its dividend unchanged at $0.2875 per share.

Reflecting on the first-quarter earnings, CEO Wael Sawan said the company “delivered strong results and robust operational performance, against a backdrop of ongoing volatility, while continuing to provide vital supplies of secure energy.”

Shell’s results follow hot on the heels of U.K. rival BP, which on Tuesday reported a drop in first-quarter profit but beat analyst expectations on robust oil and gas trading. Shares of BP fell on the news, however, as the London-listed company said it planned to slim down its share buybacks.

Big Oil smashed previous annual profit records in 2022 during a period of volatile oil and gas prices in the wake of Russia’s full-scale invasion of Ukraine.

For its part, Shell posted adjusted earnings of $39.9 billion for the full-year 2022. That comfortably surpassed the $28.4 billion in 2008 which Shell said was the firm’s previous annual record and was more than double the firm’s full-year 2021 profit of $19.29 billion.

Big Oil executives have typically sought to defend their bumper profits amid a barrage of criticism, tending to highlight the importance of energy security in the transition away from fossil fuels and suggesting higher taxes could deter investment.

The burning of fossil fuels such as coal, oil and gas, is the chief driver of the climate emergency.
Posted at 07/4/2023 13:46 by grupo guitarlumber
Shell PLC expects up to $1.2 billion of corporate loss in Q1

By: Wajeeh Khan
on Apr 7, 2023

Shell PLC expects higher gas output in the first quarter of 2023.

The oil giant also sees up to $1.2 billion of corporate loss (adjusted).

Wall Street currently has a consensus "overweight" rating on Shell.

Follow Invezz on Telegram, Twitter, and Google News for instant updates >

Shell PLC (LON: SHEL) ended in the green on Friday after the multinational said it expects higher gas output in the first quarter of 2023.

Here’s what Shell PLC expects for its Q1

On the downside, though, the oil giant now expects up to $1.2 billion of corporate loss (adjusted) related to one-off tax charges, as per the press release.

In the prior quarter, that loss was capped at $600 million.

Integrated Gas, it added, could see $1.2 billion to $1.6 billion of depreciation in adjusted pre-tax earnings in Q1. The mid of that range is in line with the prior quarter figure.

The London-listed firm now forecasts between $2.8 billion and $3.1 billion in upstream adjusted earnings. Wall Street has a consensus “overweight221; rating on Shell stock that’s currently up only 2.0% versus the start of the year.

What else was noteworthy in the update?

According to Shell PLC, Integrated Gas production is now expected between 930,000 and 970,000 barrels of oil equivalent. In Q4, it had produced 917,000 boe.

The oil and gas company continues to expect upstream production to come in the range of 1.8 million to 1.9 million. The mid of that range matches production volumes in the fourth quarter.

Shell is expected to report its Q1 financial results on May 4th. It expects up to a $700 million benefit to adjusted earnings this quarter versus $300 million in the final quarter of 2022.

In February, the energy behemoth reported a record $40 billion profit for 2022.

Posted at 01/4/2023 07:48 by waldron

Shell Drops Singapore Biofuels Project, Splits Renewables

Energy Intelligence Group

Fri, Mar 31, 2023

Marc Roussot, Singapore
Tom Daly, London
Caroline Evans

Shell has opted not to proceed with planned biofuel and base oil projects in Singapore — and separately announced a split in its renewables business as restructuring continues under new CEO Wael Sawan.

The UK major had intended to build a 550,000 ton per year biofuels complex at Bukom to produce sustainable aviation fuel (SAF) and biodiesel.

It also planned to develop a Group II base oil project, providing feedstock for its lubricants production in Singapore.

“We will continue supplying base oil and lubricants, as well as biofuels to our customers in Singapore and the region,” a Shell spokesperson said, adding that the company would draw on its global portfolio to do so.

Transition Questions

The Singapore projects were a cornerstone of the transformation of Shell's Bukom refinery and associated Jurong petrochemical plant in the Southeast Asian city-state. Bukom is one of Shell’s five energy and chemicals parks globally and the only one in Asia.

Their cancellation raises question over Shell’s transition strategy, since they were expected to reduce the company's carbon footprint, particularly its Scope 3 (end-use) emissions.

Shell has already unveiled a plan to halve its operational (Scope 1 and 2) CO2 emissions in Singapore from 2016 levels by 2030.

Bukom was also set to play a key role in the Shell's ambition to produce around 2 million tons per year of SAF by 2025 and for SAF to account for at least 10% of its global aviation fuel sales by the end of the decade.

The company's transition plan is already under scrutiny amid speculation that it may retire its guidance of a 1%-2% annual decline in oil production until 2030.

SAF Uncertainty

The move also throws into question the future of the Bukom plant, whose refining capacity was more than halved back in 2021 to 237,000 barrels per day.

Demand for SAF has been rising in Asia in line with the International Air Transport Association’s call for the aviation industry to achieve net-zero emissions by 2050.

Shell became the first company to supply SAF in Singapore last year, and was well-placed to feed key regional airports.

However, unlike the US and Europe, where biofuels mandates are in place, Asia’s demand for low-carbon fuels is voluntary, creating investment uncertainties.

SAF currently accounts for around 0.1% of aviation fuel used globally and its growth trajectory is unclear. Biofuels remain an expensive product sold at a premium to standard fuels, making them difficult for many price-sensitive Asian buyers to afford.

Renewables Shake-Up

Meanwhile, Shell said separately it is splitting up its renewable electricity business, with wind and solar to come under the control of regional heads of power arm Shell Energy.

The move re-aligns management of Shell's renewable power generation business at a time when the returns delivered by its transition investments — relative to traditional oil and gas projects — are coming under scrutiny.

Shell sets a minimum internal rate of return target of 10% for its renewable projects. "If we cannot achieve double-digit returns in a business, we need to question very hard whether we should continue in that business," Sawan said on the company's fourth-quarter earnings call. "Absolutely, we want to continue to go for lower and lower and lower carbon, but it has to be profitable."

The major will eliminate the global role of executive vice president for renewable generation, held by Thomas Brostrom.

The former Orsted executive will remain at Shell as senior vice president for Shell Energy in Europe and Asia, reporting to Executive Vice President Steve Hill.

Meanwhile, Anna Mascolo, currently Shell's executive vice president for emerging energy solutions, has been appointed executive vice president for low carbon products and sectors, overseeing biofuels, carbon capture and nature-based solutions.

Mascolo and Hill will both report to Huibert Vigeveno, Shell's downstream and renewables director.

In January, Sawan's first month in charge, Shell announced a shake-up that combined its renewables and energy solutions business with its downstream segment. Renewables had previously been grouped with integrated gas.
Posted at 09/2/2023 10:43 by gibbs1
Shell’s board of directors sued over climate strategy in a first-of-its-kind lawsuit
Published Thu, Feb 9 2023
4:07 AM ESTUpdated 45 Min Ago

Sam Meredith

Key Points

Environmental law firm ClientEarth, in its capacity as a shareholder, filed the lawsuit against the British oil major’s board at the high court of England and Wales on Thursday.

It alleges 11 members of Shell’s board are mismanaging climate risk, breaching company law by failing to implement an energy transition strategy that aligns with the landmark 2015 Paris Agreement.

“We do not accept ClientEarth’s allegations,” a Shell spokesperson said.

Shell recently reported its highest-ever annual profit of nearly $40 billion.

Shell’s directors are being personally sued for allegedly failing to adequately manage the risks associated with the climate emergency in a first-of-its-kind lawsuit that could have widespread implications for how other companies plan to cut emissions.

Environmental law firm ClientEarth, in its capacity as a shareholder, filed the lawsuit against the British oil major’s board at the high court of England and Wales on Thursday.

It alleges 11 members of Shell’s board are mismanaging climate risk, breaching company law by failing to implement an energy transition strategy that aligns with the landmark 2015 Paris Agreement.

The claim, which has the backing of institutional investors with over 12 million shares in the company, is said to be the first case in the world seeking to hold a board of directors liable for failure to properly prepare for the energy transition.

“Shell may be making record profits now due to the turmoil of the global energy market, but the writing is on the wall for fossil fuels long term,” Paul Benson, senior lawyer at ClientEarth, said in a statement.

“The shift to a low-carbon economy is not just inevitable, it’s already happening. Yet the Board is persisting with a transition strategy that is fundamentally flawed, leaving the company seriously exposed to the risks that climate change poses to Shell’s future success — despite the Board’s legal duty to manage those risks,” Benson said.

We hope the whole energy industry sits up and take notice.
Mark Fawcett
Chief Investment Officer at Nest

The group of investors supporting the claim include U.K. pension funds Nest and London CIV, Swedish national pension fund AP3, French asset manager Sanso IS and Danske Bank Asset Management, among others. Altogether, the institutional investors hold more than half a trillion U.S. dollars in total assets under management.

“We do not accept ClientEarth’s allegations,” a Shell spokesperson said. “Our directors have complied with their legal duties and have, at all times, acted in the best interests of the company.”

“ClientEarth’s attempt, by means of a derivative claim, to overturn the board’s policy as approved by our shareholders has no merit. We will oppose their application to obtain the court’s permission to pursue this claim,” they added.

Shell, which is aiming to become a net-zero emissions business by 2050, said it believes its climate targets are Paris-aligned.

ClientEarth said leading third-party assessments have suggested this is not the case, however, noting Shell’s strategy excludes short to medium-term targets to cut the emissions from the products it sells, known as Scope 3 emissions, despite this accounting for over 90% of the firm’s overall emissions.

The aspirational goal of the Paris Agreement is to pursue efforts to limit global heating to 1.5 degrees Celsius above pre-industrial levels by slashing greenhouse gas emissions. The fight to keep global heating under 1.5 degrees Celsius is widely regarded as critically important because so-called tipping points become more likely beyond this level. These are thresholds at which small changes can lead to dramatic shifts in the Earth’s entire support system.

To be sure, the burning of fossil fuels, such as oil and gas, is the chief driver of the climate emergency.
Big Oil profit bonanza

The case comes shortly after Shell reported its highest-ever annual profit of nearly $40 billion.

The energy giant’s 2022 earnings smashed its previous annual profit record of $28.4 billion in 2008 and were more than double the firm’s full-year 2021 profit of $19.3 billion.

Shell CEO Wael Sawan described 2022 as a “huge year” for the company, saying he felt privileged to be stepping into the role he started on Jan. 1.

“As we look ahead, I think we have a unique opportunity to be able to succeed as the winner in the energy transition. We have a portfolio that I think is second to none,” Sawan said.

Shell’s results came as part of a Big Oil profit bonanza last year, bolstered by soaring fossil fuel prices and robust demand since Russia’s full-scale invasion of Ukraine.

Activists from Greenpeace set up a mock-petrol station price board displaying the Shell’s net profit for 2022 as they demonstrate outside the company’s headquarters in London on Feb. 2, 2023.

Nest Chief Investment Officer Mark Fawcett said the case against Shell’s board of directors showed investors were prepared to challenge those who aren’t deemed to be doing enough to transition their business.

“We hope the whole energy industry sits up and takes notice,” Fawcett said.

Separately, London CIV’s Head of Responsible Investment Jacqueline Amy Jackson said, “In our view, a Board of Directors of a high-emitting company has a fiduciary duty to manage climate risk, and in so doing, consider the impacts of its decisions on climate change, and to reduce its contribution to it.”

“We consider that ClientEarth’s claim is in our client funds’ interest
Posted at 19/1/2023 16:29 by sarkasm
Shell needs to pay out more in dividends, claims broker

Shell’s plan to increase dividends by 15% and repurchase more than US$18bln of shares isn’t nearly enough to get its share price above rivals, Canadian bank RBC says.

“We’re not convinced competing on TSR [total shareholder return] is likely to drive material share price outperformance versus peers.

“We believe Shell should shift its payout intentions from 20-30% to simply more than 30%, which would send a positive signal to investors,” RBC concluded.

RBC has a £32 share price and an “outperform221; rating for the stock, which is currently trading at £23.50.

Wael Sawan took over as CEO as of 1 January and will need to direct the company through the energy transition and improve shareholder returns to succeed, the bank added.

“Shell has made it clear it wants to ‘earn the right’ to grow through the energy transition, so we would be surprised if Sawan opted for a transformational deal anytime soon,” the investment bank said.

Major oil and gas companies are under pressure to reduce emissions and RBC believes “Shell should pivot to a more balanced approach.”

“We believe Sawan could lead the narrative around Scope 4 or ‘avoided emissions’, which is particularly relevant for its LNG [liquified natural gas] business,” the bank stated.

RBC also believe Shell’s pursuit of being the top super-major might hinder its growth.

The oil giant has executed “many ‘first of its kind’ projects over decades,” but RBC worries that is “the reason why Shell’s returns have suffered in prior years.”

For example, “Prelude FLNG– once touted as the first of many large-scale floating LNG facilities is now increasingly a white elephant as we see it and a one-off.”

Posted at 27/10/2022 18:56 by geckotheglorious
Shell - shareholder pay-outs boosted despite dip in profits
Our view
Oil prices have come down from their summer highs and that's eating into Shell's margins. However although the group may not be printing money at the same rate it once was, times are still relatively buoyant.
Oil prices are elevated by historical standards - brent crude is trading at over $90 a barrel at the time of writing. That's compared to lows of about $19 during the height of the pandemic. This is helping Shell slice tens of billions off net debt, and fund capital expenditure into new gas fields as well as low carbon alternative fuels.

CEO Ben van Beurden is in the process of stepping down, which could mean there are changes in the pipeline. Wael Sawan, currently the head of the group's integrated gas and renewables division, will replace him.

Until now Shell's renewable strategy has been underpinned by a "wait and see" approach. With Sawan taking over, it's reasonable to expect that some clearer direction, and perhaps a more forward-thinking approach, are on the way.

Shell's committed to achieving net zero by 2050 - that means reducing the group's emissions as well as those that come from the products they sell. That will require significant investment in new technologies, or a further restructuring of the current business. About a third of its capital expenditure has been earmarked for investment in low and zero carbon products, which will rise to around half in 2025.

Despite likely tweaks to the strategy, Shell is probably going to be an oil and gas giant for decades. Our greatest concern is that oil & gas groups in general risk the fate suffered by tobacco companies. With investors turning their nose up at tobacco stocks at any price, valuations in the cigarette industry have sunk to what would ordinarily be considered unsustainable lows. We're not immediately concerned Shell will end up in the ethical waste bin. But projects to keep the group moving in the right direction risk eating into cash flows - especially as many of the newer technologies the industry is exploring are untested at a global scale.

Shell broke out its renewables division for the first time in the first quarter, and there's space to be cautiously optimistic. While the division is still heavily in the red, underlying profits have been moving in the right direction over the past 9 months. However a quarter on quarter stumble this time around means investors will have a close eye on this division moving forward. If it's to become part of Shell's growth engine in the future, it will need to be firmly in the black. This is still just a tiny drop in Shell's $7bn bucket, but if the group can nudge it into the black while oil prices are soaring it should ease the transition considerably.

Shell can afford to dabble in renewables. That is, as long as the oil price doesn't catch a cold. It's essential the group gets this project firmly on course while it's got a strong wind in its sails. That's easier said than done - volatility and oil prices go hand in hand, particularly with the ongoing geopolitical backdrop.

The prospective yield has come a long way since being slashed during the pandemic, a reflection of the improved balance sheet. With plenty of other demands though, growth might be thin on the ground and remember dividends are variable and not guaranteed. The price/earnings ratio is well below the long-term average, which reflects concerns that Shell's fortunes ultimately depend on something it can't control - oil prices. Even in a best-case scenario, its days of depending on the black stuff are ultimately limited.
Shell share price data is direct from the London Stock Exchange

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