|Bid||30.01 x 1200|
|Ask||30.32 x 1000|
|Day's range||29.74 - 30.64|
|52-week range||19.19 - 67.45|
|Beta (5Y monthly)||0.91|
|PE ratio (TTM)||12.40|
|Forward dividend & yield||3.14 (10.30%)|
|Ex-dividend date||14 May 2020|
|1y target est||52.50|
(Bloomberg) -- Global oil consumption hasn’t peaked, the head of the International Energy Agency warned, throwing cold water on hopes the coronavirus will cap demand and reduce climate-changing emissions.“In the absence of strong government policies, a sustained economic recovery and low oil prices are likely to take global oil demand back to where it was, and beyond,” Fatih Birol said in an interview.The world consumed last year nearly 100 million barrels a day of oil, and some in the energy industry believe that could mark the peak for global demand. Their hypothesis is that the coronavirus outbreak will trigger changes, like widespread working-from-home and less overseas travel, reducing consumption permanently.“Could it be peak oil? Possibly. Possibly. I would not write that off,” the head of British oil major BP Plc, Bernard Looney, told the Financial Times.If true, that would have huge implications for climate change as burning less oil would permanently reduce greenhouse emissions, easing the way to meet the goals of the Paris climate agreement. But Birol warned governments that the coronavirus will only reduce oil demand briefly, with consumption dipping in 2020 to about 91 million barrels a day, before rebounding in 2021 and beyond.“Behavioral changes in response to the pandemic are visible but not all of them are negative for oil use. People are working from home more, but when they do travel, they are more likely to be in cars than public transport,” he told Bloomberg News from Paris. “Videoconferencing will not solve our energy and climate challenges, good government policies might.”Birol is urging governments to use their economic recovery packages to fight climate change, spending on green energy to help to achieve the goals set in the 2016 Paris accord.The more ambitious target set under the Paris climate agreement -- limiting the temperature increase to 1.5 degrees Celsius -- will require annual global emissions to be reduced by about half by 2030 and to hit net-zero around the middle of the century. Without deep structural changes, emissions are expected to rise again when economies recover.The oil industry is making sweeping changes in an effort to adapt itself to the Paris climate goals, with major companies including BP, Royal Dutch Shell Plc and Total SA promising to cut emissions significantly and investing more into renewable energy as they come under pressure from more ecologically conscious shareholders. Still campaigners warn the cuts are unlikely to be enough to keep temperatures from raising to dangerous levels.“If there’s a strong economic recovery, American business consultants using Zoom will not compensate for 150 million new urban residents in India and Africa traveling, working in factories and buying products transported by trucks,” Birol said.Birol drew parallels with the 2008-09 crisis, when oil demand also suffered a major annual drop, before consumption increased again. The economic recovery packages didn’t focus back then on green energy and savings, missing an opportunity to tackle the challenge of climate change.The IEA, which advises the world’s richest countries on energy policy, is sticking to its view that global oil demand will continue to increase over the next decade or so, before reaching a plateau around 2030. In a report published in November 2019, the agency said global petroleum consumption was likely to reach about 105 million barrels a day by 2030 and about 106 million by 2040 in the absence of new government policies.In its 2019 long-term analysis, the IEA assumed significant oil savings from the sale of new vehicles over the next two decades. The use of more fuel-efficient engines would knock out 9 million barrels a day of demand, while the growth of electric cars would displace about 4 million a day. But the current economic crisis is likely to reduce car sales for a while, keeping less efficient clunkers on the road.“Fewer car sales means older cars stay on the road,” he said.(Updates with context in ninth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Oil fell, paring a weekly gain, as investors weighed improving supply fundamentals against doubts surrounding China’s economic growth.Futures in New York slid 2% Friday but notched a 13% increase for the week.Major producers continue to scale back production. U.S. explorers laid down another 21 oil rigs, bringing the total to the lowest since 2009. Beijing abandoned its economic growth target for this year due to “great uncertainty” over the coronavirus, triggering concerns over a demand recovery.“We are starting to see some gradual improvements in the global economy, notwithstanding China, and it’s going to get better from here,” said Bill O’Grady, chief market strategist at Confluence Investment Management LLC. “So, we’ve gone from being undervalued due to fears of the lack of inventory capacity to now being about where we ought to be based on where inventories are.”However, there are still warning signs that any recovery will be long and slow. The research unit of state-owned China National Petroleum Corp. said fuel demand in the country will drop by 5% this year. Plus, U.S. oil production shut-ins have peaked, Mark Rossano, an analyst with consultancy Primary Vision said.Yet, output cuts by major producers have helped shrink inventories globally at the same time that OPEC+ works to implement its pledged reductions. The alliance’s program this month is on the way to trimming 9.7 million barrels of daily crude output -- roughly 10% of global supplies and stockpiles at the storage hub at Cushing, Oklahoma, shrank by the most on record last week.China’s oil demand earlier this month was probably at 92% of levels at the same time last year, IHS Markit said, and full-year consumption is likely to be around 8% lower than in 2019.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Royal Dutch Shell Plc and Eni SpA won dismissal of a $1 billion U.K. lawsuit brought against them over allegations they knew about bribes in a Nigerian oil deal.A London judge ruled Friday that England has no jurisdiction to try the case as it involves the same essential facts as a separate Italian criminal case.The ruling is a victory for the oil companies, which have been clouded by accusations in a years-old dispute over exploration rights to a tract in the Gulf of Guinea called Oil Prospecting License 245 that has spread to courtrooms throughout Europe.The Nigerian government claims that money the companies paid to acquire the oil exploration license in 2011 was diverted to bribes and kickbacks. It says Shell and Eni are partly responsible for the behavior of Nigerian officials who used a $1.1 billion payment to acquire the oil block for personal enrichment. Shell and Eni have denied any wrongdoing.“We maintain that the 2011 settlement of long-standing legal disputes related to OPL 245 was a fully legal transaction with Eni and the Federal Government of Nigeria, represented by the most senior officials of the relevant ministries,” Shell said in a statement.Eni said it was pleased with the decision and added that the U.S. Securities & Exchange Commission and U.S. Department of Justice have also closed investigations into the Italian company’s involvement with OPL 245.The Nigerian government said in its own statement that the Italian criminal case has a completely separate legal basis from the U.K. civil case and it would seek permission to appeal.The ruling does not affect ongoing Italian criminal proceedings, where Nigeria has a separate legal claim.(Updates with Eni comment in sixth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
An English court threw out a $1.1 billion case Nigeria had brought against Royal Dutch Shell and Eni related to a dispute over the OPL 245 oilfield, a court document showed on Friday, while a related trial in Italy continues. The Nigerian government filed the case in 2018 at a commercial court in London alleging payments made by the companies to get the oilfield licence in 2011 were used for kickbacks and bribes. Justice Butcher said in his ruling seen by Reuters that the High Court "must decline jurisdiction over the action against" Shell and the other defendants.
Spain's Repsol has pulled out of a planned joint venture to develop two Arctic oil blocks with Russia's Gazprom Neft and Royal Dutch Shell , a spokesman at Repsol said on Friday. Gazprom Neft, the oil arm of Russian gas giant Gazprom , Repsol and Shell signed a memorandum of understanding last June on establishing a joint venture to develop the Leskinsky and Pukhutsyayakhsky blocks on the Gydan Peninsula in northern Siberia.
(Bloomberg Opinion) -- After 2008, metals and oil rebounded together from the depths of the financial crisis, as China’s consumption of raw materials took off. This time, their recoveries may look quite different.Crude faces a lengthy convalescence from the catastrophic lows of April, when U.S. oil plunged into negative territory. Industrial metal prices have fallen far less, and look healthier: Closures to control the spread of coronavirus in countries like Peru have squeezed production, just as China is gearing up. Add in Beijing’s infrastructure plans, expected to be outlined at the National People’s Congress meeting starting Friday, plus the prospect of green stimulus and more mineral-intensive clean energy, and the outlook looks rosier still.Copper is indicative of these divergent paths. Out of other metals, Bloomberg Intelligence reckons it has moved most closely with oil over 160 years — a coefficient of 0.96 over that time. The link is beginning to weaken, and the current crisis will only make that more pronounced.Why so?Oil has certainly made an impressive comeback over the past few weeks: Many producers are still losing money, but West Texas Intermediate is back above $30, and there was no repeat of April’s crash when the contract rolled over this week. Brent crude is up almost 90% after last month dropping below $20. That’s because the supply glut has shrunk, thanks to the end of Russia’s price war with Saudi Arabia and significant involuntary shutdowns among U.S. producers, easing concerns about global storage capacity. That’s helpful, even if improving prices could bring back some shale activity.Metals have also taken a hit to output from coronavirus lockdowns in Latin America and elsewhere. In late April, BMO analysts estimated these affected 23% of global capacity for copper, 15% for nickel and 24% for zinc. Projects like Anglo American Plc’s Quellaveco in Peru, where workers downed tools, could see delays. That’s helped copper to rise back toward a modest $5,500 per metric ton.Supply reductions aren’t enough to make a difference without better demand, though, and that’s where the divergence becomes clearer. China tells part of the story. Construction activity and manufacturing are on the mend, drawing down metal inventories. It’s true that oil consumption is reviving, too: China’s taxis, buses and cars have been back at normal levels since early April, and traffic congestion has returned. But while that’s good news for gasoline and local refiners, it’s hardly salvation for global oil. Recoveries elsewhere are progressing more slowly and most of the world’s aircraft are still grounded. Simply put, China’s recovery matters more for metals, with the country accounting for roughly half of global consumption. By comparison, it makes up less than 14% of oil demand.Now consider the cautious nature of Beijing’s economic reboot, which is a signal for other countries, and the bumps along the post-pandemic road to recovery. These make the picture darker for oil. Factories might keep producing washing machines, but more of us will stay away from leisure travel and work from home if incidents like the reappearance of the virus in China’s northeast repeat themselves. It’s not even clear that an aversion to the risks of public transport will get us back in our cars again, as my colleague David Fickling has pointed out. Demand for personal protective equipment like masks is hardly enough to offset a drop in gasoline and even jet fuel, which past experience suggests will take years to recover.The NPC is expected to include a revived version of past efforts to develop the country’s western hinterland, alongside other stimulus efforts. No one anticipates a boost akin to what was seen in 2008. Even a similar amount would probably have a weaker multiplier effect — yet the boost will matter for copper, zinc and more. And that’s before the wider green fiscal push, in and outside China, that favors mined materials needed for batteries, grids and energy storage. The solar industry in Asia-Pacific alone is expected to use around 378,000 tons of copper by 2027, almost double 2018 levels.Mark Lewis, global head of sustainability research at BNP Paribas Asset Management, splits the long-term pressures in three: the world’s push toward reducing carbon emissions, cheap renewable energy and air pollution, highlighted by the clear blue skies of recent weeks. Add in the behavioral changes brought by the pandemic and the future of oil is more uncertain than ever, he argues. With even Royal Dutch Shell Plc arguing that peak oil demand will come sooner than expected, it’s hard to disagree.There may not be a uniform global green stimulus, and some ambitions will remain just that. Yet a World Bank report last week gives an indication of the potential growth story: It says the goal of limiting the global temperature rise to 2 degrees Celsius will require production of graphite, lithium, and cobalt to ramp up by more than 450% by 2050, compared with 2018, in order to meet energy storage requirements. Aluminum and copper, used across technologies, will also be in demand. And that’s excluding infrastructure like transmission lines.In the future we’ll still need oil. We just might need metals more.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Tanzania has seen some successful exploration results in recent years, but has failed to take advantage of it as a result of budding bureaucracy
Royal Dutch Shell has begun drilling the Saturn block in the Santos pre-salt basin, the company's Brazil chief said on Thursday, adding that Brazil faces hurdles to remain attractive in a low-price environment. Brazil's No. 2 oil producer after state-run Petroleo Brasileiro , Shell is the operator of block with a 45% stake, along with Chevron , also at 45%, and Ecopetrol, with 10%. Araujo stressed that the global oil industry scenario is challenging and that Brazil faces regulatory challenges to remain attractive, with a new level of prices ahead.
(Bloomberg) -- Royal Dutch Shell Plc will use measures including voluntary severance for staff to bolster its finances as the coronavirus pandemic batters profits, according to people with knowledge of the matter.In a note to staff, Chief Executive Officer Ben van Beurden wrote that the organization was being reshaped to make it leaner and more resilient, the people said. The company has already slashed spending and surprised investors with a two-thirds cut to its dividend.Shell isn’t the only company making big changes to withstand the unprecedented oil-industry disruption caused by Covid-19. Most of its peers have made big spending reductions, while Norway’s Equinor ASA also cut its dividend.BP Plc promised its employees their jobs were safe at least until the end of June, but companies including Chevron Corp., Marathon Oil Corp. and Halliburton Corp. are laying off employees.As well as the offer of voluntary severance, the people said that Shell is seeking savings by significantly scaling back external recruitment and reviewing the contracts of expatriate staff. There could be further redundancies related to the pandemic in the second half of the year, they said.“Over the coming months we will go through a comprehensive review of the company. Where appropriate we will redesign our organization to adapt to a different future and emerge stronger,” Shell said by email in response to questions from Bloomberg about van Beurden’s memo.The CEO wrote that Shell will have a clearer picture of what the reorganization of the company will look like by the end of the year, with some divisions being affected more than others, the people said.Van Beurden reiterated that there wouldn’t be a group performance bonus for anyone in the company, having first announced the measure when Shell reported its first quarter results. The memo also added that there should be low expectations for salary increases over the next 18 months, the people said.(Updates with other companies’ layoffs in fourth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The coronavirus pandemic has indelibly impacted the global energy sector. Although the demand for oil has noticeably dropped and prices have plunged, the pace of shift to renewable energy from fossil fuel is still uncertain.
Royal Dutch Shell evacuated some 60 foreign staff from Iraq's Basra Gas Company as a security measure following a protest over delayed pay, company officials said on Thursday, adding production was unaffected. The staff were flown out of the country on Wednesday after workers protested at the headquarters of Basra Gas Company (BGC), a venture between state-owned South Gas Company, Shell and Mitsubishi, to demand payment of their delayed salaries, officials said. "Shell confirms that as result of a security breach at the accommodation camp of Basra Gas Company, we have temporarily relocated Shell secondees," Shell said in emailed comments.
(Bloomberg) -- Oil rose for the fifth straight session as investors weighed signs the market is rebalancing against what’s still a precarious economic outlook.Futures in New York for July delivery rose 4.8% Wednesday. The U.S. Energy Information Administration showed crude oil inventories declined for the second week in a row and the Cushing, Oklahoma, hub saw a record draw of 5.6 million barrels. But a surprise 2.8 million barrel increase in gasoline stocks reflected ongoing weakness in demand.“U.S. production is adjusting to the lower demand which is helping to keep inventory levels from reaching the concerns everybody had of reaching capacity,” Rob Thummel, portfolio manager at Tortoise, said in a phone interview. The increase in gasoline inventories is a short-term indicator that demand didn’t rise as much as everyone was expecting last week, he said.The record draw in Cushing sent a bullish signal to traders. The so-called WTI June/July cash roll traded at 30 cents Wednesday, the first time it’s been in above zero since December, according to Bloomberg data. The price signals that a U.S. supply glut that’s sent benchmark oil spiraling in recent months may be diminishing.See also: Gig Economy Drivers Are Fueling U.S. Gasoline Demand ReboundWTI prices have climbed this month amid the nascent recovery in demand and reductions in supply. Frontline Ltd. sees global oil production cuts reversing as early as the second half of 2020, depending on demand and Federal Reserve Bank of Dallas President Robert Kaplan said during an interview on Bloomberg Television that U.S. oil shut-ins may be at their peak right now.“If you get a little bit of extra demand, suddenly everybody is turning the taps up,” said Michael Hiley, head of over-the-counter energy trading at LPS Futures. “So, the supply could very quickly overwhelm the demand.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- A Total SA-led liquefied natural gas project in Mozambique will receive commitments for about $15 billion of financing at a signing scheduled in June, marking rare progress for such a project as companies scrutinize costs.The first and most significant phase of the financing commitment for the LNG project -- which will be Africa’s biggest private investment yet -- involved lenders including about 20 banks, according to people familiar with the matter. That will move ahead at a time when plans for other facilities in the region and globally have been delayed.Acquiring funding for construction of the $23 billion project, which will chill natural gas into a liquid for export, comes as oil and gas companies globally are focused on cutting expenditure as the coronavirus curbs energy demand and pressures prices.The group of about 20 banks involved in the lending includes Rand Merchant Bank, Standard Bank Group Ltd. and Societe Generale SA, which is acting as the financial adviser, according to one of the people familiar.Dele Kuti, Standard Bank’s global head of oil and gas, said the company was “pleased to see the progress” on achieving final credit approvals for the Mozambique LNG project, without confirming details of the financing.“We have also approved large participations in Mozambique LNG’s ECIC and commercial tranches. We look forward to signing the facilities in the next few weeks,” Kuti said.Rand Merchant Bank declined to comment. Societe Generale did not immediately respond to a request for comment.Plans for similar facilities have been put on hold or canceled. Royal Dutch Shell Plc exited a multi-billion-dollar LNG export terminal planned for Louisiana in March as coronavirus started to slash gas demand. Exxon Mobil Corp. delayed a final investment decision on its Rovuma LNG project in Mozambique that was expected later this year.The LNG market glut is expected to last through at least the middle of the decade, but some companies are betting global demand will recover after prices for the super-chilled fuel fell to a record low along with a drive for cleaner energy sources from India to China.A spokeswoman for the Mozambique LNG project said it expected to resume work in June after a coronavirus outbreak at the site, but didn’t respond to questions on its financing. First production is scheduled for 2024.The U.S. Export-Import Bank has approved the $4.7 billion loan to back American suppliers for the project. Japan Bank for International Cooperation will provide $3 billion, Mozambique state-owned newspaper Jornal Noticias reported on Tuesday.The so-called Area 1 LNG project will generate about $38 billion in revenue for Mozambique’s government over its lifetime, according to a Finance Ministry forecast. That will be supplemented by sales from the even bigger project led by Exxon and planned in the neighboring Area 4 offshore block.(Updates throughout with details of LNG projects on hold globally.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Probably the most significant piece of recent news from either company is Shell's late-April announcement that it was cutting its dividend by two-thirds, down to just $0.32/ADR share. This surprise move, the company's first dividend cut since World War II, took Shell from being the highest yielder among the five oil majors to the lowest.
Dozens of demonstrators chanting "Shell must fall" gathered on Tuesday outside the oil giant's headquarters in the Netherlands, where a virtual annual shareholders' meeting was underway. Roughly 30 activists from environmental groups Greenpeace, Extinction Rebellion and Code Red sang and danced in protest at the Hague offices of Royal Dutch Shell. During the shareholders' meeting, some large investors were expected to press the company for more concrete action to reduce its environmental footprint and meet the Paris climate goals.
Oil companies may be facing uncertainty as the coronavirus pandemic triggers a collapse in demand for their products, but auto makers are betting the crisis will help accelerate an electric future. With economies reeling from lockdowns to curb the virus, the sharpest plunge in oil prices in two decades has slashed the cost of filling up a tank of gas, eroding some of the incentive to make the switch to cleaner fuels. Looking ahead, cuts in capital spending forced upon energy companies as their revenues crumble could tighten supply enough to cause a spike in oil prices, making electric vehicles more attractive just as automakers ramp up production, analysts say.
The Zacks Analyst Blog Highlights: JPMorgan Chase, AbbVie, Royal Dutch Shell, Gilead Sciences and Anthem
Royal Dutch Shell's historic 66% dividend cut has paved the way for its British rival, BP (NYSE: BP), to secure the crown as the oil major with the highest dividend yield. BP management recently reaffirmed their decision to keep the quarterly dividend unchanged as of Q1 2020, meaning BP's dividend yield stands at a whopping 11.3% as of this writing.
Europe's top oil and gas companies have diverted a larger share of their cash to green energy projects since the coronavirus outbreak in a bet the global health crisis will leave a long-term dent in fossil fuel demand, according to a Reuters review of company statements and interviews with executives. The plans of companies like BP , Royal Dutch Shell and Total are in step with the European Union's efforts to transition to a lower-carbon economy and away from a century-old reliance on oil, and reflect the region's widening rift with the United States where both the government and the top drillers are largely staying committed to oil and gas. Global oil majors have all cut capital spending sharply as worldwide stay-at-home orders triggered by the coronavirus outbreak slammed fuel demand and sent oil prices to record lows.
A Russian pipe-laying vessel, Academic Cherskiy, and which Moscow can use to finish laying pipes for the Nord Stream 2 gas project, has moored near the German logistics hub in Mukran, Refinitiv Eikon tracking data showed on Monday. Led by the state gas company Gazprom, Nord Stream 2 had to suspend pipelaying works late last year, hit by fresh U.S. sanctions. The project is aimed at doubling existing undersea flows to Germany to 110 billion cubic metres per year.
Shell's stock is now down by more than 50% in 2020. Let's take a closer look to see if Shell looks like a buy, even without a best-in-class dividend yield. Among the five oil majors, Shell has consistently been a top dividend yielder for the last five years.