|Oil supermajors dig out of doldrums as cash poised to surge
By Rakteem Katakey on 4/26/2017
(Bloomberg) -- Oil majors' struggle against crude’s collapse is starting to ease, giving some companies enough cash to pay shareholders without piling on more debt.
The world’s five biggest non-state oil producers, known as the supermajors, probably increased cash from operations by a combined 67% last quarter from a year earlier, according to HSBC Bank Plc analysts Gordon Gray and Kim Fustier. That may allow some to cover dividends and capital spending without borrowing for the first time since 2012, they said.
In the past three years, Exxon Mobil Corp., Royal Dutch Shell Plc, Chevron Corp., Total SA and BP Plc have canceled billions of dollars of projects, dumped thousands of jobs and amassed towering debts to weather crude’s decline. While prices are still half their 2014 level, a partial recovery, coupled with spending cuts, contributed to “sweet-spot221; conditions in the first quarter that probably drove up earnings, according to Morgan Stanley.
The “macro environment was favorable for the majors during the first quarter,” said Martijn Rats, an analyst at Morgan Stanley in London, citing higher prices and resilient refining margins. “In addition, cost reductions are still coming through,” helping bring a “significant improvement in net income,” he said.
The five companies combined are expected to more than double first-quarter net income, according to analyst estimates compiled by Bloomberg. Chevron will return to profit while Shell’s earnings will rise to a seven-quarter high, the estimates show. Exxon, Total and BP may post their biggest profits since September 2015.
“The oil price is a big thing, but the other thing is they’ve also been helping themselves by taking operating costs out of the business,” said Jason Gammel, a London-based analyst at Jefferies International Ltd. “We are at oil-price levels where most of these companies are pretty close to covering their dividend.”
The big five oil producers also operate refineries and petrochemical plants, giving them a safety net during crude’s downturn when earnings from oil and gas production sank. Refining margins rose during the worst of the slump as the cost of the raw material -- crude oil -- fell while demand for fuels stayed strong. Margins have since narrowed but remain buoyant.
Yet doubts remain. Oil’s recovery has stalled this year as a revival in U.S. shale production threatens an attempt by the Organization of Petroleum Exporting Countries and its allies to eliminate a global oversupply. Although benchmark Brent crude rose more than 50% last year, prices are down about 9% in 2017.
Amid concern that OPEC and its partners will fail to reduce stockpiles significantly, energy companies have performed worst in the MSCI World Index this year, tumbling from pole position in 2016. After rising 44% last year, BP’s shares are down 12% in 2017, while Shell’s B shares are about 11% lower in London. Exxon has dropped 9.5%, Chevron 9.3% and Total 2.2%.
The majors won’t come roaring back until oil prices rally further, according to Alastair Syme, an analyst at Citigroup Inc.
“The sweet-spot of financial firepower -– and therefore higher returns to shareholders –- still requires significant price recovery,” Syme said in an April 19 note, downgrading both Shell and BP. While the companies have offered shareholders stock in place of cash, and implemented hefty cost cuts, they still haven’t adequately tackled the high cost of dividends, he said.
Dividend yields at Shell and BP, which fell through 2016 as crude started to recover, have risen this year, typically a signal that investors fear a cut in payouts.
BP declined to comment when contacted by email. Shell referred Bloomberg to Chief Executive Officer Ben van Beurden’s comments earlier this year, when he said free cash flow “more than covered our cash dividend” in the fourth quarter.
France’s Total will kick off the supermajors’ first-quarter earnings season on April 27, with Exxon and Chevron following the next day. BP will report on May 2 and Shell on May 4.
“You’d hope by now the cost and spending cuts start showing up in the accounts,” said Iain Armstrong, an analyst at Brewin Dolphin Ltd., which owns BP and Shell shares. “Benefits of oil prices will be a major factor and how much of that the companies have been able to capture with lower costs.”|
|BRUSSELS -- European energy firms pledged Monday to finance half the cost of a natural-gas link from Russia to Germany, lending support to a pipeline plan that is fueling tensions within the European Union.
A consortium of five companies -- Engie SA, OMV AG, Royal Dutch Shell PLC, Uniper SE and Wintershall Holding GmbH -- said they would provide up to EUR4.75 billion ($5.1 billion) in long-term financing to Nord Stream 2 AG, a wholly owned subsidiary of Russia's state-owned PAO Gazprom.
The move highlights Europe's complicated relationship with Russia, and comes just days after U.S. President Donald Trump rejected Exxon Mobil Corp.'s request for a waiver of sanctions so it could resume an oil venture with a Russian partner.
While European firms seek to protect access to Russia's market and resources, most EU countries oppose the Kremlin's intervention in Ukraine and fear its push to project more power across the world. That dichotomy has pitted EU nations against each other, with some calling Nord Stream 2 a Trojan horse put forth by Russia to exploit European disagreements while others, led by Germany, are championing the project as a key energy initiative.
About a dozen EU countries claim that allowing Gazprom to double the existing Nord Stream pipeline's capacity would increase Europe's reliance on Russian gas while enabling Moscow to cut back on eastern routes through Ukraine and Belarus. That would threaten the bloc's energy security, while also undermining a key diplomatic objective for Brussels: supporting Kiev amid its conflict with Moscow.
"There will need to be a very tough discussion," an EU official said Monday. "Nord Stream is clearly a divisive project; we'll need to do some kind of damage control."
EU sanctions against Russia are not an obstacle to the funding agreement between Gazprom and its European partners, said Nord Stream 2's representative to Brussels, Sebastian Sass.
Each European firm will provide up to EUR950 million in long- and short-term loans, according to the deal. The Russian gas giant will tap more than EUR1.4 billion of the cash this year, and access the rest as it decides on how to finance the pipeline, the lenders said.
"The financial commitment by the European companies underscores the Nord Stream 2 project's strategic importance for the European gas market," Gazprom, its European partners and the pipeline company said in a joint statement.
Monday's agreement follows the EU's admission last month that Brussels cannot legally block the proposed pipeline, which would be ready by the end of 2019. Nord Stream 2 would add another 55 billion cubic meters to annual gas flows to Germany, about 14% of the EU's yearly consumption.
Polish competition authorities previously blocked the five European companies from taking a 50% stake in Nord Stream 2. Undeterred, the firms continued to support the project. By guaranteeing half the funds Gazprom needs to bankroll the link, European firms have signaled their confidence that the project won't be halted by EU bureaucrats.
In an attempt to find a political solution to the divisive issue, the European Commission, the bloc's executive arm, said it will seek a mandate from EU governments to negotiate with Russia on terms that would govern use of Nord Stream 2.
It remains unclear whether the commission will get a green light to approach Moscow for an agreement. German Foreign Minister Sigmar Gabriel had told Russian President Vladimir Putin that Berlin would strive to prevent EU involvement in Nord Stream 2.
"Nord Stream 2 is a business undertaking that, as usual, we won't comment on," said Economy Ministry spokeswoman Tanja Alemany Sanchez de León.
Berlin has long argued that the pipeline is a commercial project, with no room for government interference as long as it complies with German and EU laws.
"What is certain is that this project is of great importance for Germany, certainly they will be very much involved in pushing it through," a European diplomat in Brussels said. "The discussion has reached a point where all the sides voiced their concerns...I'm not quite sure what might happen next."
Write to Emre Peker at email@example.com
(END) Dow Jones Newswires
April 24, 2017 13:48 ET (17:48 GMT)|
|04 May 2017
First quarter 2017 results|
|Aramco CEO Sees Oil Market Closer to Balance Despite U.S. Boom
by Jessica Summers
14 April 2017, 21:37 CEST
Rise in U.S. output leading to short-term price drop: Nasser
Aramco IPO is “on track” and “everything is going well”
Saudi Arabian Oil Co. CEO Amin Nasser Photographer: Jason Alden/Bloomberg
The global oil market is moving closer to balance even as increases in U.S. oil production push prices down in the short-term, Saudi Arabian Oil Co. Chief Executive Officer Amin Nasser said.
“This is not a good indication of where the market is likely to be headed going forward, as the large new production capacity and investment we will need in the future are lagging,” Nasser said during an event at Columbia University in New York Friday. “While the short-term market is pointing to a surplus of oil, the supply required in the coming years is falling behind.”
Many indicators are pointing to a more balanced market, Nasser said. The combined inventories of countries in the Organization for Economic Cooperation and Development are flattening and poised to drop, among other signs that the market is tightening, he said.
Saudi Arabia, the Organization of Petroleum Exporting Countries’ biggest producer, is cutting output as it leads efforts to eliminate a global crude glut and bolster prices. The country produced almost 10 million barrels a day in March, it reported to OPEC. All the country’s oil was pumped by Saudi Aramco, as the company is known.
Aramco, which has agreed to pay Royal Dutch Shell Plc $2.2 billion to breakup a 19-year refining partnership known as Motiva Enterprises LLC, is discussing several refining and marketing joint ventures in Southeast Asia, such as Indonesia, Nasser said. With about 60 percent to 70 percent of its exports going to Asia, it’s very much focused on growth in this area, which includes looking for investments within China’s downstream sector. The company is also evaluating opportunities in the U.S. as part of its plan to increase its global refining and marketing capacity to between 8 million and 10 million barrels a day.
“As part of this effort, we will build on our Motiva business in the U.S. once the transaction is completed between Shell and Aramco,” he said.
With the payment to Shell, which includes debt, Aramco’s Saudi Refining unit will take full ownership of the Motiva Enterprises name and legal entity, including the largest refinery in the U.S. at Port Arthur in Texas.
IPO “On Track”
Aramco is planning what may be the world’s largest stock sale. The kingdom is courting foreign investors as it seeks to diversify its economy and gears up for the planned sale of a 5 percent stake in the company. Deputy Crown Prince Mohammed bin Salman, the king’s influential son, has said the company could be worth more than $2 trillion. The initial public offering will probably take place in the second half of 2018, Nasser previously said.
The IPO is “on track. Everything is going very well,” Nasser said Friday.
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Last month, the Saudi government slashed the level of taxation imposed on the company, lowering the rate to 50 percent from 85 percent in a bid to boost the valuation. Helped by the lower levy, the company’s oil and natural gas reserves equivalent to 310 billion barrels could make it worth between $1 trillion to $1.5 trillion, based on valuations for other producers, Sanford C. Bernstein & Co. said last month.
A 5 percent sale of a $2 trillion company would bring in about $100 billion, dwarfing the $25 billion snared by Chinese Internet retailer Alibaba Group Holding Ltd. in the world’s largest IPO in 2014.
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google translation from french
Royal Dutch Shell A stock prices oscillate horizontally. This distribution phase must theoretically give way to a return of volatility.
We can position ourselves with the purchase to aim the 26.67 €.
The company benefits from attractive valuation levels with a relatively low EV / CA ratio compared to other listed companies in the world.
The company benefits from multiple attractive results. With a PER of 14.03 for 2017 and 12.4 for 2018, the company is among the least expensive in the market.
The company is part of the yield values with a relatively large expected dividend.
The upward revisions in sales estimates over the past few months reflect a renewed optimism on the part of the analysts covering the issue.
Analysts covering the record mostly recommend buying or overweighting the stock.
The discrepancy between the current prices and the average price objective of the analysts covering the issue is relatively large and implies considerable potential for appreciation.
The stock follows a positive long term trend above the support level of EUR 23.72.
The estimates of the various analysts who follow the file are not all in adequacy. The dispersion of estimates implies either a lack of visibility related to the activity or divergent opinions.
The group's publications have often disappointed in the past, with relatively large negative deviations from expectations.
Over the past 12 months, the momentum for revisions to earnings is largely negative. In general, analysts now expect profitability below their estimates a year earlier.|
the grumpy old men
|Shell agrees gas supply deals in Australia
By Robb M. Stewart
Published: Apr 6, 2017 2:20 a.m. ET
MELBOURNE, Australia--Under pressure to ensure industry in Australia isn't hit with a shortfall of natural gas, Royal Dutch Shell PLC (RDSA) said it had agreed short-term sales deals with a power supplier and a maker of explosives.
The energy company is reducing exports of gas from its QGC operation in tropical Queensland in order to supply additional gas to the domestic market this year, said Zoe Yujnovich, the recently appointed chairwoman of Shell's Australian business.
The supply contracts add to sales agreements signed with power generators and retailers, and bring total domestic sales from QGC to about 11% of east-coast demand for 2017, Ms. Yujnovich said.
The company said it would supply about 8 petajoules of gas to Engie SA's (ENGI.FR) Pelican Point power plant in South Australia state for five months over the peak winter period, and had agreed an 18-month deal to supply gas from Queensland's Surat Basin fields to Orica Ltd.'s (ORI.AU) Yarwun explosives and cyanide operation.
"Shell's business on the east coast has reacted to the gas market," she said.
Amid warnings of a looming gas shortage in the southeast and volatile power prices, Prime Minister Malcolm Turnbull last month extracted a commitment from energy companies to supply enough gas to meet local demand during peak periods and to work toward increasing supplies longer term. At a meeting in Canberra with company executives, the prime minister held out the prospect of regulating exports or other measures if the industry wasn't able to ensure adequate supply.
Days earlier, a report from the operator of the country's gas and electricity markets projected a shortfall in gas-power electricity generation in southeast states from as early as next summer if no action was taken.
Shell's new supply deals come on the heels of an agreement last week by Origin Energy Ltd. (ORG.AU) to supply gas to Engie's Pelican Point plant over three years from July, and in return buy electricity from the plant to supply to its own customers.
Worries about power supplies came to a head late last year when South Australia was hit by several blackouts, including a statewide outage after a violent storm that left many homes and businesses without power for several days. The prospect of further blackouts prompted Tesla Inc.'s Elon Musk to offer--initially via Twitter and later during a phone calls with political leaders including Mr. Turnbull-- his company's energy-storage technology as a solution to the state's energy troubles.
Industry groups have for several years warned of rising prices and risks to supply as major gas-export plants ramp up production of liquefied natural gas. Three massive LNG plants on Curtis Island in northeastern Queensland, operated by Shell, Origin and Santos Ltd. STO respectively, are tapping methane buried in inland seams of coal and converting it to LNG for export to Asia.
The Shell and Origin-led ventures gave a commitment to Mr. Turnbull to being net domestic gas suppliers and the third operation said it would take the matter on notice.
Write to Robb M. Stewart at firstname.lastname@example.org|
|Shell Plans to Tap Gas Hunger in Emerging Energy Demand Center
by Saket Sundria
and Debjit Chakraborty
5 April 2017, 12:46 CEST
Plans to sell gas directly to end users such as power plants
Sets up team in Singapore to look at opportunities in India
Royal Dutch Shell Plc plans to boost its gas marketing business in India and may expand its import capacity for the fuel as it seeks to tap the country’s demand-growth potential.
The Anglo-Dutch company is aiming to sell imported natural gas directly to users such as power utilities, fertilizer makers, petrochemical plants and city gas distributors, said Shaleen Sharma, head of upstream development in India. Shell has also set up a team in Singapore to look for opportunities to ship more liquefied natural gas to India, he said.
“We are looking at more play in the gas market,” Sharma said in Mumbai on Tuesday. The country isn’t producing enough of its own natural gas to meet demand, creating a market for growing LNG imports, he said.
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An expanding economy and a growing population put the country on track to be the biggest driver of global energy demand through 2040, according to the Paris-based International Energy Agency. India is seeking to increase the share of natural gas in its energy mix to 15 percent by 2020 from 6.5 percent now. To boost demand for the cleaner fuel, the government has cut taxes on the fuel and encouraged its use for transport.
Shell, which is remaking itself as a gas company after the acquisition of BG Group Plc, operates a 5-million-ton-a-year LNG import terminal at Hazira on India’s west coast. The Hague-based company may expand the Hazira facility and is also considering importing gas through other LNG terminals in India, Sharma said.
“To sustain our gas-based industry, we have to complement it with importing gas,” he said. “The good part is, it is coming at very competitive prices now.”
Shell, which has over 6,000 employees in India, is a supplier of oil products and is expanding its fuel retail businesses in the country. It holds a 30 percent stake in the Panna-Mukta/Tapti oil and gas fields offshore western India and owns 32.5 percent of Mahanagar Gas Ltd., which supplies natural gas in Mumbai and adjacent areas.
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Since the establishment of the GECF in 2001 there has always been speculation that some of the world's largest producers of natural gas, in particular Russia and Iran, intend to create a gas cartel equivalent to OPEC which would set quotas and prices. The idea of a gas OPEC was first floated by then Russian President Vladimir Putin and backed by Kazakh President Nursultan Nazarbaev in 2002. In May 2006 Gazprom deputy chairman Alexander Medvedev threatened that Russia would create "an alliance of gas suppliers that will be more influential than OPEC" if Russia did not get its way in energy negotiations with Europe. Iranian officials have explicitly expressed strong support for a gas cartel and held official talks with Russia. Cartel speculation was again raised when the ministers met on 9 April 2007. The 6th Ministerial Meeting of the GECF established an expert group, chaired by Russia, to study how to strengthen the GECF. According to the Algerian Energy and Mines Minister Chakib Khelil, this mean that in the long term the GECF will move toward becoming a gas OPEC. On 11 December 2009, Russia's Energy Minister Sergey Shmatko stated: "Today we can speak about gas OPEC as a fully fledged international organization. By a unanimous decision a Russian national was elected its secretary general. This is to show that member countries expect Russia to use its political weight to promote it."
Creation of the "Gas OPEC" was one of the topics of the first GECF's summit. However, some GECF's members are concerned over the gas exports to be politicized.|
Any ideas as to when gas prices will substantially uncouple from oil prices|
|Payment date March 27, 2017|
|Royal Dutch Shell (RDSa.L) is in talks with several potential buyers for its refinery outside of San Francisco, but the Anglo-Dutch oil giant is reluctant to part with its last asset in California, three people familiar with the process say.
The company is in the midst of a massive asset sale, shedding properties from Thailand to the North Sea to pay down debt following its $54 billion purchase of smaller British rival BG Group last year.
Shell, Europe's largest oil company, has sold around $15 billion of assets over the past year as part of a planned $30 billion in asset sales to trim debt incurred from the transaction.
Bidders for Shell's 158,000 barrel-per-day Martinez refinery, located 30 miles (48 km) northeast of San Francisco, include PBF Energy (PBF.N) and NTR Partners III LLC.
Still, sources familiar with the issue say the company wants to sell for a higher price, with one saying the plant could be valued at about $900 million.
Shell, which barred potential buyers from hiring advisors during a first round of the auction, has since allowed third parties to review materials related to a sale, according to one person familiar with the negotiations.
Shell declined to comment. PBF referenced its quarterly calls with analysts, where it has said it considers all refining and logistics assets that come on the market, but declined to comment on interest in the specific plant. NTR did not respond to requests for comment.
Shell retained Lazard last year to advise on the overall asset sale program. In the fall, Shell retained Deutsche Bank to find a buyer for the Martinez facility.
EXIT FROM CALIFORNIA?
Over the past 15 years, Shell has sold refineries in Bakersfield and Wilmington, California. Selling the Martinez plant would mark its exit from the state.
While state-specific emissions regulations and fuel standards make it more expensive to operate a refinery in California, the plant still drew interest because of its location and ability to process local crude.
Among the bidders, PBF bought a refinery in Torrance, California last year, while privately held NTR Partners has bid on other California plants.
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California's environmental regulations and pipeline connections make the state an island, with few sources for gasoline imports.
As a result, when one plant in California is shuttered, margins at other refineries in the state surge.
Most operators in the state own more than one plant. PBF, one of the only California refiners with a single operation, would consider buying a second to hedge against disruptions at its troubled Torrance refinery, Jeff Dill, PBF's president for West Coast operations said last month.
The Martinez refinery, which has been operating since 1915, processes crude into gasoline, jet fuel, diesel and other refined products and has a coker unit for processing heavy crude.
The potential sale would include a pipeline that brings crude produced in California's San Joaquin Valley to the refinery.
(Reporting By Jessica Resnick-Ault in New York and Ron Bousso in London; Additional reporting by Jarrett Renshaw and David French in New York and Liz Hampton in Houston; Editing by Bernadette Baum)|
|Oil prices rise on talk that OPEC could extend supply cut
Updated / Tuesday, 21 Mar 2017 07:29
Strong demand for oil is working to slowly erode a global fuel supply overhang
Strong demand for oil is working to slowly erode a global fuel supply overhang
Oil prices rose today on expectations that an OPEC-led production cut to prop up the market could be extended.
Strong demand is also working to slowly erode a global fuel supply overhang.
Prices for front-month Brent crude futures, the international benchmark for oil, were at $51.86 per barrel early this morning up 24 cents, or 0.5%, from their last close.
US West Texas Intermediate (WTI) crude futures were up 13 cents, or 0.3%, at $48.35 a barrel.
The Organisation of the Petroleum Exporting Countries, together with other producers including Russia, has pledged to cut its output by almost 1.8 million barrels per day (bpd) between January and June in an effort to prop up prices and rein in a global supply glut that has dogged markets for almost three years.
Yet so far the cutback has not had the desired effect as compliance by involved exporters is patchy and as other producers, including the US, have stepped up to fill the gap, resulting in crude prices falling more than 10% since the beginning of the year.
To halt the decline, OPEC members increasingly favour extending the pact beyond June to balance the market, sources within the group said, although they added that this would require non-OPEC members like Russia to also step up their efforts.
Traders also said that healthy oil demand would help rebalance markets and support prices.|
|Royal Dutch Shell Plc 22.1% Potential Upside Indicated by HSBC
Posted by: Amilia Stone 16th March 2017
Royal Dutch Shell Plc using EPIC/TICKER code LON:RDSA had its stock rating noted as ‘Reiterates217; with the recommendation being set at ‘BUY’ this morning by analysts at HSBC. Royal Dutch Shell Plc are listed in the Oil & Gas sector within UK Main Market. HSBC have set a target price of 2600 GBX on its stock. This would indicate that the analyst believes there is a potential upside of 22.1% from today’s opening price of 2129 GBX. Over the last 30 and 90 trading days the company share price has decreased 43.5 points and decreased 38 points respectively.
Royal Dutch Shell Plc LON:RDSA has a 50 day moving average of 2,185.05 GBX and a 200 Day Moving Average share price is recorded at 2,053.47 GBX. The 1 year high for the share price is 2295.5 GBX while the year low stock price is currently 1622 GBX. There are currently 9,693,247,496 shares in issue with the average daily volume traded being 6,316,343. Market capitalisation for LON:RDSA is £207,726,293,839 GBP.
Royal Dutch Shell Plc is an independent oil and gas company, based in the United Kingdom. It operates in three segments: Upstream, Downstream and Corporate. Upstream combines the operating segments Upstream International and Upstream Americas.|