Shell puts Arctic drilling plans on ice as it posts first profit warning in a decade
…van Beurden warned that the pain may not be over, saying it was possible that Shell would make new writedowns on its North American operations.
The US was among the factors that dented this year’s performance, as Shell continued to feel the effects of a shale gas glut that has sent prices tumbling.
Its North American arm is likely to be restructured, with some of its assets there to be put up for sale.
By Rob Davies
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Ben van Beurden said Europe’s largest company by revenue would be ‘changing emphasis’ after a tough year that saw pre-tax profits slump 23 per cent to £15.3billion.
‘None of us at Shell are comfortable with these results,’ he said, admitting that ‘we’ve lost momentum and can sharpen our performance in a number of areas’.
Van Beurden’s plan will see spending hacked back from the £28billion of last year to £22.5billion in 2014 – largely by making fewer acquisitions and launching a £9billion two-year asset sale programme.
The Dutchman has also shelved plans to drill for oil in Alaska for the second year in a row and refused to rule out abandoning Shell’s Arctic ambitions altogether.
He said the company was ‘frustrated’ by a US court ruling that threw the validity of its exploration permits into doubt, making it ‘impossible to justify’ trying to drill this summer.
In another break with the reign of predecessor Peter Voser, who stepped down on January 1 to pursue a ‘change of lifestyle’, he abandoned targets the company had set to measure performance.
Shell missed production goals last year and van Beurden said he would no longer set concrete targets for cash flow and net spending.
Shell’s shares rose 22p to 2147.5p as investors, many of whom have called for lower spending, took heart from van Beurden’s strategic shift.
Oil pundit Malcolm Graham-Wood welcomed the approach, saying Shell’s shares could yet hit £25.
‘It’s a new era for Shell and whilst you don’t change something this big overnight the signs are that Ben van Beurden has gauged the mood of the market and decided that action like this is mandatory,’ he said.
But van Beurden warned that the pain may not be over, saying it was possible that Shell would make new writedowns on its North American operations.
The US was among the factors that dented this year’s performance, as Shell continued to feel the effects of a shale gas glut that has sent prices tumbling.
Its North American arm is likely to be restructured, with some of its assets there to be put up for sale.
Nigeria has been another thorn in Shell’s side, with its onshore operations also on the block, having been blighted by years of oil theft, pipeline vandalism and spills.
Nigeria has been another thorn in Shell’s side, with its onshore operations also on the block, having been blighted by years of oil theft, pipeline vandalism and spills.
Finance director Simon Henry said this had cost Shell £33million and 40,000 barrels a day in the fourth quarter compared to last year.
Van Beurden said Nigeria was causing Shell the ‘most headaches’ of any region in its portfolio, admitting that it was ‘a complex situation that we simply cannot resolve’.
There had been speculation that Shell might buy its way into UK shale gas, after French firm Total invested in ‘fracking’ firms planning to extract Britain’s reserves.
But the Shell boss ruled this out, saying that ‘we don’t see UK shale gas ranking high enough for us to justify getting into it’.
Production during 2013 reached 3.2million barrels a day, a 2 per cent decline on last year, as the company was hit by unexpected maintenance shutdowns.
This was among the key factors that hit profitability, with large chunks of high-margin areas such as the North Sea and Nigeria out of action.
Shareholders are in line for a first-quarter dividend of $0.47 per share, up more than 4 per cent compared to the payout in the same period last year.
COMMENT BY JOHN DONOVAN: We published a brief article nearly a month ago under the headline “Insider rumours circulating that Shell may divest Shell Oil Co.” We now have confirmation above that it had some foundation.
SHELL FRAUD AND SCAM ALERT
CLICK ON FRAUD AND SCAM ALERT IMAGE TO ENLARGE
By John Donovan
SHELL FRAUD AND SCAM ALERT: This is not about the way Royal Dutch Shell Plc executive directors, including Ben van Beurden and Simon Henry (right), have held back information from Shell shareholders until eventually being advised by lawyers that Shell must issue a profits warning, but about scam artists using Shell’s name to front bogus job recruitment schemes, fake lotteries, sham business propositions etc. Some might say there is little difference – ask OSSL in Ireland who accuse Shell directors of deceiving them. I receive enquiries almost every day from people trying to fathom whether purported communications from Shell are genuine. I am not going to publish them because it might give legitimacy to names and contact information used by the fraudsters. Instead, I am continuing to refer people to the Shell Fraud and Scam alert on the Shell.com website. Wonder when certain Shell executive director names will be posted?
Royal Dutch Shell leadership: Bring back Sir Henri Deterding
If only it was possible to resurrect Sir Henri Deterding at his best, the extraordinary Dutchman who built the Royal Dutch Shell Group. In his first couple of decades at Shell he was a brilliant decisive leader brimming with ambition, ideas and incredible determination. He would have acted to exploit BP’s self-inflicted misfortunes, whereas Van der Veer and Voser let the opportunity pass and instead took Shell down a disastrous path placing all bets on so-called elephant projects that turned out to be white elephants.
By John Donovan
In my view, the last Shell executive director/Chairman who had any gumption and plain commonsense was Sir John Jennings.
Since his time, long term Shell shareholders have witnessed a parade of hopelessly incompetent Royal Dutch Shell fat cat bosses.
The roll call of failed leaders includes Sir Philip Watts, Jeroen van der Veer and Peter Voser.
All three mired by disappointment and scandal.
Jorma Ollila has been non-executive Chairman of Royal Dutch Shell Plc for several years spanning the tenures of the last two failed CEO’s and has proven equally uninspiring and flawed.
Its obviously too early to make any firm judgement about Ben van Beurden in his new role, although I fear that he may be overwhelmedif this article is any guide.
Perhaps his “strange explanations” for Shell’s dire situation result from the realisation of what a fine mess the company is in.
It should not have come as a complete shock given his decades with the company, for the last year as an executive director working closely with Voser.
If only it was possible to resurrect Sir Henri Deterding at his best, the extraordinary Dutchman who built the Royal Dutch Shell Group.
In his first couple of decades at Shell he was a brilliant decisive leader brimming with ambition, ideas and incredible determination.
He would have acted to exploit BP’s self-inflicted misfortunes, whereas Van der Veer and Voser let the opportunity pass and instead took Shell down a disastrous path placing all bets on so-called elephant projects that turned out to be white elephants.
Unfortunately the huge success of Deterding, becoming a globally known figure meddling in international politics and intrigue, constantly quoted in the news media, eventually went to his head and like Sir Philip Watts, he turned into a megalomaniac. In his later years at Shell, Sir Henri became an ardent supporter of his close co-conspirator Adolf Hitler (with shared ambitions on Russian oil fields), and saved the Nazi party from financial collapse by pumping in funds generated on Shell forecourts around the globe.
The TRUTH will set you FREE.
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