Shell Share Discussion Threads

[sarkasm] 05/10/2018 15:19

Shell, Siemens Gamesa and innogy back novel floating offshore wind concept

Fri 05 Oct 2018 by David Foxwell

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Shell, Siemens Gamesa and innogy back novel floating offshore wind concept
The TetraSpar has a modular layout consisting of a tubular steel main structure with a suspended keel

Floating offshore wind has received a major boost with news that oil company Shell, turbine manufacturer Siemens Gamesa Renewable Energy and energy company innogy are undertaking a demonstration project using an innovative floating foundation.

Oil major Shell, innogy and Stiesdal Offshore Technologies (SOT) have signed an investment and co-operation agreement committing them to build a demonstration project using SOT’s TetraSpar floating foundation concept.

The TetraSpar’s modular layout consists of a tubular steel main structure with a suspended keel. It is expected to offer important competitive advantages over existing floating wind concepts, with the potential for leaner manufacturing, assembly and installation processes with lower material costs. The project has a budget of approximately €18M (US$21M).

Innogy chief operating officer renewables Hans Bünting said “These are exciting times. The floating offshore wind market is evolving, but until now, floating foundations have been stubbornly expensive.

“This demonstration project will give us a better understanding of how the cost can be driven down. The industrialised approach of the TetraSpar design, combined with innogy’s experience in delivering offshore wind projects, will enable large-scale, cost-effective deployment of floating wind projects around the world.”

Shell Wind Development vice president Dorine Bosman said “This initiative could help to lower the cost of offshore wind energy while providing more options for development locations, giving access to higher wind speeds and deeper water depths. Building our offshore wind business is a key part of the Shell New Energies strategy. Investing in innovative projects such as TetraSpar gives us early access to a new technology that could help us become a leading player in this field.”

The demonstration project will use a 3.6-MW Siemens Gamesa Renewable Energy direct drive offshore wind turbine and is due to be deployed in 2019. It will be located approximately 10 km from shore in water depths of 200 m at the test site of the Marine Energy Test Centre near Stavanger in Norway.

The foundation will be manufactured and assembled in Denmark and the turbine will be installed in the port of Grenaa, from where it will be towed to site. At the site the floating structure will be moored to the seabed with three anchor lines and connected to the electrical grid.

SOT chief executive Henrik Stiesdal said “We are very excited about the prospect of carrying out the deployment and test of our full-scale demonstration project in collaboration with leading industry players. We have already benefited greatly from the dialogue with innogy, Shell and Siemens Gamesa Renewable Energy during the project planning. Their experience combined with the competencies of our manufacturing and installation partners, Welcon and Blue Power Partners will put us on the fast-track for rapid commercialisation.”

The partners will set up a company with a 33% share each for innogy and Shell with the rest held by SOT and its parent company. Siemens Gamesa is contributing to the project as a technology partner and will provide the wind turbine and required services. The partners will be part of a project team that will gain detailed, practical insights into the construction, installation and operation of the TetraSpar concept as well as detailed performance data.

[imperial3] 05/10/2018 14:50

A lousy day for the share price.

[sarkasm] 05/10/2018 13:08

Shell announces senior appointment

Published by David Rowlands, Deputy Editor
LNG Industry, Friday, 05 October 2018 11:00
Shell has announced that Tahir Faruqui, previously General Manager, Origination North & Central America Shell LNG Marketing & Trading, has been appointed as General Manager, Shell Global Downstream LNG.

Faruqui will be based in The Hague and takes over from Lauran Wetemans who is moving on to a new position. Faruqui originally joined Shell in 1997 as a Senior Analyst with Shell Services in the US. Shortly after that, he pursued commercial deal making in Shell Capital, focusing on investing in oil and gas opportunities.

Seizing the opportunity to broaden beyond energy, Faruqui completed an MBA from University of Chicago and then spent the next four years with Bain & Company in strategy consulting where he focused on transformational projects with mid-to-large corporations across multiple industries. With this broad commercial experience, Faruqui returned to Shell Trading & Supply in Gas & Power in their Structured Finance group. He was then appointed as Vice President for the Energy Retailer business in North America where he also co-led the South Power network team.

In 2014, Faruqui began running the conventional LNG Trading and Downstream LNG businesses for North & Central America. In his new role, he will utilise his commercial breadth and depth, established networks and understanding of the business to deliver Shell’s Global Downstream LNG strategy.

[sarkasm] 05/10/2018 10:34

November 1, 2018 Third quarter 2018 results and third quarter 2018 interim dividend announcement

[fjgooner] 05/10/2018 10:22

It's great to observe a nice, strong start to the quarter, with Iranian sanctions still a month away.

2018Q2
Highest: 80.50 Lowest: 66.69 Difference: 13.81 Average: 74.97

2018Q3
Highest: 82.87 Lowest: 70.30 Difference: 12.57 Average: 75.84

2018Q4 (thus far)
Highest: 86.74 Lowest: 82.55 Difference: 4.19 Average: 85.09

We all know that Shell's very robust profit & revenue forecasts for 2020 are based on just $60.

And RDSB is still under £30 - but I doubt that it will remain so by Xmas.

FJ :)

[fangorn2] 04/10/2018 22:20

@Jon123

be 20 times worse if labour get into power

Indeed. We'll be past my scenario in 6 months and homing in Venezuelan poverty within 18-24 months!

[xxxxxy] 04/10/2018 19:26

Ups and downs. But in good company.

[waldron] 04/10/2018 17:23

Total
56.07 -0.41%


Engie
12.705 -0.70%

Orange
13.73 -0.15%


FTSE 100
7,418.34 -1.22%
Dow Jones
26,605.05 -0.83%
CAC 40
5,410.85 -1.47%



Brent Crude Oil NYMEX 85.06 -1.07%
Gasoline NYMEX 2.10 -1.28%
Natural Gas NYMEX 3.19 -1.48%



BP
598.3 +0.07%


Shell A
2,657 -0.34%



Shell B
2,694 -0.43%

[jon123] 04/10/2018 16:22

be 20 times worse if labour get into power

[fangorn2] 04/10/2018 10:28

$100 nails on recession for mid 2019 onwards imo.
Recession, 10yr UST hitting 3.5% and austerity finally coming.

Not much to look forward to.

[xxxxxy] 03/10/2018 18:56

100. Interesting Times

[blueclyde] 03/10/2018 18:29

You are getting a huge div and at this price a free shot at at least 30% upside what's not to like? The assumptions in the presentation are based on oil at $60 a barrel so the will be huge amounts of cash flow plus an aggressive buy back.

[waldron] 03/10/2018 18:08

Total
56.3 +0.18%


Engie
12.795 +0.20%

Orange
13.75 +1.03%


FTSE 100
7,510.28 +0.48%
Dow Jones
26,936.79 +0.61%
CAC 40
5,491.4 +0.43%


Brent Crude Oil NYMEX 85.29 +0.70%
Gasoline NYMEX 2.12 -0.32%
Natural Gas NYMEX 3.24 +2.37%



BP
597.9 +0.15%


Shell A
2,666 +0.40%


Shell B
2,705.5 +0.52%

[sarkasm] 03/10/2018 15:49

This High-Yield Stock Just Locked In High-Octane Growth for 2019
A needle-moving acquisition sets up this 5.6% yielder to grow its payout at a mid-teens rate next year.
Matthew DiLallo
Matthew DiLallo
(TMFmd19)
Oct 3, 2018 at 9:21AM

Oil giant BP (NYSE:BP) quietly formed a master limited partnership (MLP) toward the end of last year to begin cashing in on the value of its midstream assets. In the process, it provided income-seeking investors with a new high-yielding option to consider. It did so by seeding BP Midstream (NYSE:BPMP) with a solid portfolio of cash flowing pipelines that would not only support a lucrative distribution to investors but had enough embedded organic growth so that the MLP could increase that payout at a 5% to 6% annual rate through 2020.

BP, however, thinks that it could grow the payout of its MLP at an even faster pace by dropping down additional midstream assets to the company in the coming years. The two companies recently completed the first such dropdown deal, which positions BP Midstream to increase its 5.6%-yielding distribution by a mid-teens rate next year. Meanwhile, with a large supply of acquisition opportunities in the pipeline and other expansion possibilities it could pursue, BP Midstream could continue increasing its payout at a high rate in the coming years, making it a potential gold mine for income seekers.
A speedometer accelerating.

Image source: Getty Images.
Details on the deal

BP Midstream Partners has agreed to acquire interests in three assets from BP in a transaction valued at $468 million. The first asset is Mardi Gras, a joint venture (JV) with Royal Dutch Shell (NYSE:RDS-A)(NYSE:RDS-B) and its MLP, Shell Midstream Partners (NYSE:SHLX), which operates four offshore pipelines. BP Midstream already owned 20% of BP's interest in the JV but will now hold 65% of that stake. It's an important system that the partners have recently expanded so that it can support their new projects in the Gulf. They include Shell's Appomattox platform, which should start up next year, and BP's Thunder Horse North West Expansion, Atlantis Phase three, and Mad Dog 2, which will begin in 2019, 2020, and 2021, respectively.

BP Midstream will acquire BP's roughly 22.7% interest in Ursa, another offshore pipeline, as well. Shell also operates this pipeline, which will support the company's Kaikias development that started up earlier this year.

The final asset acquired is a 25% stake in KM-Phoenix, which is a JV with pipeline giant Kinder Morgan (NYSE:KMI). BP initially sold a 75% stake in the JV that held 14 terminals -- as well as selling one outright -- to Kinder Morgan for $350 million in 2015. However, KM-Phoenix currently operates 13 refined product terminals, with most supplied under long-term contracts by refineries operated by BP.

These new additions do two things for BP Midstream. First, it provides the company with need-moving growth since the cash flow from these assets should give it the fuel to increase its distribution at a mid-teens rate next year while supplying it with additional organic growth in the future as those offshore projects come on line. It further diversifies the company's revenue stream by adding onshore terminals to its portfolio of pipelines.
Closeup of a man showing a thumb up gesture, pumping gasoline in a car at a gas station.

Image source: Getty Images.
Plenty of fuel in the tank

This transaction represents just a fraction of BP's U.S. midstream assets, leaving it with a vast pool of future drop-down candidates. For example, the company holds the right of first offer to acquire a long list of pipelines as well as stakes in pipeline joint ventures currently owned by BP, including the remaining interest in Mardi Gras. In addition, BP owns logistics assets such as loading and unloading docks and storage at its refineries, other infrastructure to support production, as well as a significant business to business fuels distribution service.

On top of the opportunities already embedded within BP that BP Midstream could acquire, there's also the potential for it to build or buy other assets to support BP's growth in the states. That's what Shell Midstream did last year when it acquired a stake in the Nautilus gas gathering system developed by Crestwood Equity Partners (NYSE:CEQP), which it started building to support Shell's fast-growing production from the Permian Basin. Crestwood and Shell Midstream will now work together to expand that footprint to meet Shell's needs in the future. BP could potentially seek out similar arrangements with midstream companies to support its growth after agreeing to spend $10.5 billion to bulk up its shale business earlier this year. BP Midstream could also participate in the development of long-haul pipelines to move production out of those regions, leaving it with no shortage of opportunities to expand.
The first of many

BP Midstream's deal with BP will provide it with enough fuel to grow its lucrative payout at a double-digit rate next year. It's the start of what will likely be a steady string of transactions between the two companies, which could give BP Midstream the fuel to grow its distribution at a fast pace for the next several years. That growing income stream makes the MLP an intriguing option for income-seeking investors to consider.

[fjgooner] 03/10/2018 15:35

Well, 3:30pm's figures won't be helping this week. Very lumpy API data as usual.

Not long before sanctions effect starts kicking in though.

[mr woodentop] 03/10/2018 07:44

considering oil price in may was around $76 when share price was over £28 I think there is a bit too go yet

[fjgooner] 03/10/2018 02:21

It feels like this is becoming a rather tightly coiled spring that can only unwind one-way and ferociously north at some point in the not too distant future.

The absence of share price movement thus far has been very strange in the light of a massive revision upwards in terms of Brent crude and LNG prices.

Perhaps later at 3.30pm today will trigger the surge?

FJ

[adrian j boris] 02/10/2018 19:22

Assessing Shell's Potential Returns From Higher Oil Prices
Oct. 2, 2018 9:54 AM ET|
8 comments
|
About: Royal Dutch Shell plc (RDS.A), RDS.B
Daniel Thurecht
Daniel Thurecht
Long-term horizon, contrarian, oil & gas, industrials
(302 followers)
Summary

During the previous year oil prices have continued to climb on the back of improved market fundamentals.

Based on my analysis I believe Shell's shares offer a significant amount of potential returns if oil prices continue to hold in the low $80 a barrel range going forward.

Even if oil prices fall back to the low $60 a barrel range I believe Shell's shares still offer a decent amount of potential returns.
Introduction

During the previous year the oil market conditions have improved significantly with the bullish fundamentals of tight supply, modest demand growth and limited spare capacity all pushing prices to multiyear highs. Naturally this has changed the main discussion surrounding oil producers, such as Shell (RDS.A) (RDS.B). Previously the main topic was whether they would maintain their dividend, but investors such as myself are now more interested with their potential return if oil prices remain supportive. Whilst I cannot tell with certainty that this will be the case, considering the bullish fundamentals mentioned before, it certainly seems plausible. Therefore, in this article I will be providing my analysis of Shell’s future valuation and dividend potential if Brent oil prices average in the low $80 a barrel range going forward.
Valuation

To begin I will provide my estimations for a future fair price for Shell’s class B ADR shares, which is based off their 2019-2021 guidance provided on page 22 of their 2018 Q2 results presentation. This guidance can be seen below, which shows they are targeting $25b to $30b in organic free cash flow per annum between $25b and $30b with Brent oil prices in the low $60 a barrel range. Going forward when I refer to “free cash flow,” I will be referring to their organic free cash flow as I prefer to exclude the effects of divestitures and acquisitions.

Free Cash Flow

Image Source: Shell 2018 Q2 Results Presentation Page 22 (previously linked).

To provide a conservative valuation I will be using the lower end of their guidance, $25b, and since this guidance is across a three year time frame, I will split the difference and assume this is achieved in 2020. Before adjusting this guidance for a higher oil price environment, I will first provide a baseline valuation that assumes Brent oil prices only average this lower $60 a barrel range. My estimated future values for Shell will be based off free cash flow yields between 6% and 5%, which seem realistic given their historical free cash flow yields (see below).

Chart RDS.B Free Cash Flow Yield (NYSE:TTM) data by YCharts

Combining these yields with free cash flow of $25b produces valuations of $417b to $500b respectively. It is obvious that these are both significantly higher than their current market valuation capitalization of $296b. However, before calculating the potential per share capital appreciation I will account for the effects of their recently announced $25b share buyback program. At the current market capitalization this would allow management to repurchase approximately 8.5% of all outstanding shares. However, since this will be effected by their future share price and to ensure I provide a conservative valuation, I will assume that only 5% of their outstanding shares are repurchased.

When Shell reported their 2018 Q2 report they had 8,342,622,781 shares on issue, which would fall to 7,925,491,642 in 2020 after the buyback program has been completed. Therefore, after adjusting for the effects of their ADR share consolidation (see notes below) this would imply a share price of $105 to $126, based on the $417b to $500b market valuations calculated previously. Currently Shell’s class B ADR shares are trading for $70.93 and thus this indicates a potential upside of 48% to 78% during the next two years even if Brent oil prices only average in the low $60 a barrel range.

Whilst this alone is a significant potential return, the main purpose of this article is to calculate the potential return if Brent oil prices average a higher level. Even though some market analysts are talking of a return to $100 per barrel Brent oil, I feel this may be too far of a stretch and thus I will use $80 a barrel. Shell management has stated that for every $10 per barrel of Brent oil increases their operating cash flow should increase by approximately $6b, see below.

Free cash flow 2

Image Source: Shell 2018 Q2 Results Presentation Page 22 (previously linked).

Since capital expenditure should remain unchanged, this additional cash flow should directly flow-through to their free cash flow and increase it to $37b ($25b + 2x$6). However, since higher oil price environments can lead to cost inflation and I wish to provide a conservative valuation, I will remove $2b of this additional cash flow, resulting in free cash flow of $35b. The same valuation method as before produces a market valuation of $583b to $700b, or $147 to $177 for their class B ADR shares, implying an upside of 107% to 150% during the next two years.

Notes: Their total (class A & B) outstanding share count was sourced from their 2018 Q2 results announcement. Since I’m valuing their class B ADR shares, all calculations halved this share count as each ADR represents two normal shares.
Dividend

Presently Shell pays an annual dividend of $3.76 per ADR, which they have maintained at this level for just over the last four years. Obviously with the oil price crash now firmly in the rear-view mirror, investors are expecting a return to growth in the coming years.

I will use the free cash flow that was previously calculated to estimate Shell’s potential annual dividend payments for 2020. During 2017 Shell paid out almost all of their after interest expense free cash flow as dividends to shareholders, however I doubt this will continue going forward. Therefore, I believe a more realistic assumption is for approximately 2/3 or 67% to be paid out as dividends, with the remainder being used to further reduce debt and conduct share buybacks.

In the scenario where Brent oil prices only averages $60 a barrel and they produce $25b in free cash flow, this would leave $16.75b for dividends payments, implying an annual dividend payment of $4.23 for a yield on current cost of 5.96%. Applying the same principals to the scenario where Brent oil prices average $80 a barrel produces an annual dividend of $5.92 for a yield on current cost of 8.34%.

Notes: Once again, when calculating their dividends per share I halved their total (class A & B) outstanding share count to adjust for the ADRs consolidation. The yield on current cost was calculated with the current market price at time of writing for their class B shares of $70.93.
Financial Position & Risks

Since completing their takeover of BG Group approximately two and half years ago, Shell has done a remarkable job reducing their debt levels with their gearing ratio now standing at a manageable 23.6%, as per their 2018 Q2 results. I see no reason to be concerned with their financial position when combining this with their current ratio of 1.27, interest coverage ratio of 10.64, A+ credit rating and strong free cash generation.

Due to timing constraints I cannot discuss every risk factor and I suggest anyone interested should read the relevant sections of their 2017 annual report. Obviously the main risk is another oil price crash, possibly stemming from the current U.S.-China trade war. Considering the very bullish fundamentals of the oil market and Saudi Arabia’s intention to keep prices stable, I feel a complete crash during the foreseeable future is a very low probability event. Even if another financial crisis were to occur I believe the oil market would rebound fairly quickly, especially if Saudi Arabia and Russia reduce their production. That said, even if another oil price crash were to occur I believe Shell’s financial position and operations are strong enough to continue paying their current dividend for at least two consecutive years of sub-$50 per barrel Brent oil prices.

Notes: All figured in the section were calculated by myself with the data sourced from their 2018 Q2 results announcement, previously linked.
Conclusion

To conclude, my analysis has shown that in theory Shell’s investors have a significant amount to gain if oil prices continue trading strongly well into the future, with potential capital appreciation of between 107% and 150% and an 8.34% dividend. However, even if this is not necessarily the case and Brent oil only averages around $60 a barrel, Shell’s investors still have ample capital appreciation and dividend growth to enjoy. Therefore, I will continue holding my large investment in Shell I made during the oil price crash of 2015-2016.

Disclosure: I am/we are long RDS.B.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

[waldron] 02/10/2018 17:46

waldron
16 Aug '18 - 14:34 - 3451 of 3480 Edit
0 4 0
Should be fun to chalk it up BOX BY BOX

2375 to 2475p
2475 2575p end august 2018
2575 2675 end october 2018
2675 2775 end december 2018$$$$$$$$$$WE ARE HERE TODAY$$$$$$$$$$$$$$$$$$$
2775
2875
2975 to 3075p xmas 2019
3075
3175
3275
3375 to 3475p xmas 2020

A SLOW CRAWL TO FJGOOONERS DREAM TARGET PRICE OF 3400p which may well be changed if convincingly surpassed before CHRISTMAS 2020

[waldron] 02/10/2018 17:40

Total
56.2 -0.30%


Engie
12.77 +1.07%

Orange
13.61 -0.07%


FTSE 100
7,474.55 -0.47%
Dow Jones
26,786.6 +0.51%
CAC 40
5,467.89 -0.71%


Brent Crude Oil NYMEX 84.93 -0.02%
Gasoline NYMEX 2.12 -0.36%
Natural Gas NYMEX 3.17 +1.80%



BP
597 +0.29%


Shell A
2,655.5 +0.26%



Shell B
2,691.5 -0.19%


PREMIUM SLIPS TO 36p

[the grumpy old men] 02/10/2018 16:22

LONDON--A group led by Royal Dutch Shell PLC is pressing ahead with a major Canadian liquefied natural gas project after years of delay, the company said Tuesday, raising competition for new U.S. developments already under pressure from freshly implemented Chinese tariffs.

The 14-million-ton-a-year project is the biggest LNG development to gain approval in years and the first for Canada. By the mid-2020s, it is expected to be able to deliver massive tankers of supercooled natural gas to demand centers in Asia.

Shell and its partners' commitment to the project, which will cost roughly $14 billion to construct, signals growing confidence in global gas markets, as rising demand diminishes the threat that new supplies entering the market will cause a glut. It marks the end of a seven-year effort, blighted by weak prices that pushed back the final investment decision on the project by two years.

The decision suggests the prospects are positive for other large gas-export projects. A cluster of developments are currently vying for approval in Qatar, Russia, Mozambique and the U.S. Yet in the U.S. the outlook is dimming.

Earlier this month, China imposed a 10% tariff on imports of super-chilled gas from the U.S. in retaliation to levies imposed by the Trump administration. China is the biggest source of new global LNG demand and is expected to be a voracious consumer in the coming years as a result of efforts to move away from smog-inducing coal-fired power. Its demand rose around 50% in 2017.

"Right now, this is not very good for American LNG projects working hard to take final investment," said Morten Frisch, a U.K.-based independent gas industry consultant.

More than a dozen LNG projects are awaiting regulatory approval in the U.S., though analysts say only a few are likely to get the go ahead before the end of next year. If Chinese buyers fall away, those projects could become more difficult to finance.

"When the Chinese decided to put tariffs on U.S. gas the one take away we had from that is that the real losers will be U.S. LNG projects," said Trevor Sikorski, head of natural gas research at consultancy Energy Aspects.

Shell's new development is designed to send gas from Canada, where prices are relatively low, to Asia, where it can fetch a premium. Aside from coming without additional tariffs, the project, called LNG Canada, benefits from its location: The shipping distance from Kitimat, British Columbia, to North Asia is about 50% shorter than from the U.S. Gulf of Mexico and avoids the Panama Canal.

"Lots of people are talking about the emerging LNG deficit in the middle of the next decade but very few projects are being built to feed that deficit. We're encouraged and excited to see companies start to make investment decisions," said Nick Stansbury, head of commodity research at Legal & General Investment Management, which is a shareholder in Shell.

Shell said construction of the project would start immediately, with production expected to begin before the mid-2020s. The first phase of development will consist of two processing units, with the potential to double that in the future.

The oil-and-gas giant is anticipating that the project's startup will align with a shortage in LNG supply, as rapidly growing demand sucks up large volumes of new production. It said the project is expected to generate an internal rate of return of around 13%.

"Total global LNG demand is expected to double by 2035, but new FIDs have been lagging and supply gap is expected to open up in the middle of the next decade," Shell chief financial officer Jessica Uhl said.

Located on Canada's Pacific coast, the massive LNG export facility will receive natural gas from remote fields in British Columbia that currently struggle to find a market. TransCanada Corp. has been contracted to build a 670-kilometer to supply the processing facilities with gas. In total, the building the export facility and pipeline is expected to employ around 10,000 people

Shell holds the largest share of LNG Canada with 40%, alongside partners PetroChina, Mitsubishi Corp., Korea Gas Corp. and Malaysia's Petroliam Nasional Bhd. The presence of such large players has enabled the project to move forward without securing long-term offtake agreements--generally a prerequisite for such large developments to gain financing.

The Anglo-Dutch oil company has bet big on natural gas, anticipating strong demand growth in the coming years. The company's 2016 acquisition of BG Group for roughly $50 billion turned it into the world's largest non-state-backed player in the LNG market.

"This is one of the most significant decisions we've made in recent times," said Ms. Uhl. "It's the right project at the right place at the right time.

Write to Sarah Kent at [e-mail] and Sarah McFarlane at [e-mail]



(END) Dow Jones Newswires

October 02, 2018 10:03 ET (14:03 GMT)