JOHN DONOVAN JANUARY 19, 2014 ARTICLE

Wake up, Shell, the days of big spending are over

Jan 19th, 2014 

by John Donovan. 

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“On Friday the chickens came home to roost, with Ben van Beurden, who took over from Peter Voser last year, having to announce a painful profits warning just 11 days before the year-end results.” The article says that Shell shareholders are fractious, and if Ben van Beurden ignores their concerns, Royal Dutch Shell Plc will be a prime target for activist investors. I have news for The Sunday Times. That is already the case. No wonder Mr Voser was content to fly off early. As for BvB, it must be the shortest honeymoon in corporate history for the CEO of a multinational. The phrase “poisoned chalice’ comes to mind.

By John Donovan

Dominic O’Connell, the Business Editor of The Sunday Times has today sent a strong message to Royal Dutch Shell in his Agenda column under the headline: “Wake up, Shell, the days of big spending are over.”

The article says that although major shareholders have had a soft spot for Shell, even through the reserves scandal, “that love affair is on the wane.”

He says Shell seems to have missed the change in policy by other oil and gas producers in response to shareholder demands, who have stopped squandering cash on expensive new projects and instead are returning it to the owners.

Extract

“On Friday the chickens came home to roost, with Ben van Beurden, who took over from Peter Voser last year, having to announce a painful profits warning just 11 days before the year-end results.”

The article also says that Shell shareholders are fractious, and if BvB ignores their concerns, Royal Dutch Shell Plc will be a prime target for activist investors. I have news for The Sunday Times. That is already the case.

From what was stated in a Wall Street Article published yesterday, the new Chief Executive is likely to be receptive, as he apparently already had reservations about the “elephant projects” promoted by a previous Shell CEO, Jeroen van der Veer.

I note that a recent contributor to our Shell Blog who claims to be a “Pundit” suggests that other “much more interesting things are going on…”  We have already published an article earlier this month about rumors circulating inside Shell.

No wonder Mr Voser was content to fly off early.

As for BvB, it must be the shortest honeymoon in corporate history for the CEO of a multinational.

The phrase “poisoned chalice’ comes to mind.

ACCESS TO THE SUNDAY TIMES ARTICLE (SUBJECT TO SUBSCRIPTION)

Posted in: Ben van Beurden, GoogleNews, Jeroen van der Veer, John Donovan, Oil Company Profits, Peter Voser, Royal Dutch Shell Plc.
Tagged: Ben van Beurden · John Donovan · Peter Voser · Royal Dutch Shell Plc

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JOHN DONOVAN JANUARY 18, 2014 ARTICLES

In defence of Ben van Beurden

Jan 18th, 2014 

by John Donovan. 

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An article published today by The Wall Street Journal – “Shell, Bruised by Big Bets, Warns of Profit Miss” – makes the case from the standpoint of Ben van Beurden, why he should not be blamed for the profits warning announced yesterday by Royal Dutch Shell Plc that shocked the markets.

By John Donovan

Shell crushed by out of control elephants?

An article published today by The Wall Street Journal – Shell, Bruised by Big Bets, Warns of Profit Miss – makes the case  from the standpoint of Ben van Beurden, why he should not be blamed for the profits warning announced yesterday by Royal Dutch Shell Plc that shocked the markets.

Apparently he warned that Shell should be cautious in relation to multibillion dollar elephant projects, which were pushed by Jeroen van der Veer, the first Chief Executive of Royal Dutch Shell Plc. BvB claims that he had no say over investments in EP projects and “questioned if it made sense for Shell to bet so heavily on ‘big-ticket’ projects”.

He is also said to be one of the senior executives who decided to abandon plans for a $20 billion gas-to-liquids plant in Louisiana.

On Friday,  Shell gave variety of excuses, with no elephants in the room.

Extracts from Daily Mail article.

Shell blamed a string of factors including maintenance shutdowns in particularly high margin businesses such as liquid natural gas and a general decline in oil prices.”

It also pointed to an increase in the cost of oil exploration, difficult conditions for oil refining and the weak Australian dollar.

Other setbacks include continued losses in Shell’s North American production operations and the security situation in Nigeria, where pipelines have been shut due to vandalism and oil theft.

The Wall Street Journal article by Justin Scheck is well worth reading.

RELATED:

A bad start for Shell CEO Ben van Beurden

Sell Shell And Oil Majors: Shell forecast disastrous earnings on January 17th. Forbes captured investor sentiment in the catchy title of an excellent article “What The Hell, Shell? Oil Giant Warns On Disasterous Quarter“.

Posted in: Ben van Beurden, Corporate Governance, Daily Mail, GoogleNews, Jeroen van der Veer, John Donovan, Oil Company Profits, Royal Dutch Shell Plc.

A bad start for Shell CEO Ben van Beurden

Jan 18th, 2014 

by John Donovan. 

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Like Mr Voser BvB seemed eager to assume the top job and appeared to be decisive, which was encouraging. That was before he became an apparent victim of what is being described as Shell’s current “annus horribilis.” Seems to be an annual event. 

By John Donovan

Not exactly an inspiring start by the new Chief Executive Officer of Royal Dutch Shell Plc, Ben van Beurden.

Three weeks into his tenure and already one of his executive director colleagues has suddenly left the company without any rational explanation. Now we have the profits warning that took the markets by surprise and a related admission by BvB that “our 2013 performance was not what I expected from Shell.”

I can only surmise that he has not been a regular visitor to this website, or he might have been rather better informed than apparently has been the case, if we are to believe his claim of ignorance, as if he was some mere bystander.

There have been countless news reports from around the world about the profits warning, but thus far none has highlighted the fact that BvB was an executive director of Royal Dutch Shell Plc during the period in question (from a year ago) and therefore has to accept a share of the blame for what has gone wrong.

There will be no dodging responsibility now that he has the top job.

Like Mr Voser BvB seemed eager to assume the top job and appeared to be decisive, which was encouraging. That was before he became an apparent victim of what is being described as Shell’s current “annus horribilis.” Seems to be an annual event. 

RIGHT OF REPLY

Any comment BvB wishes to make will be published here on an unedited basis.

Posted in: Ben van Beurden, Corporate Governance, GoogleNews, John Donovan, Oil Company Profits, Royal Dutch Shell Plc.

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JOHN DONOVAN JANUARY 17, 2014 ARTICLES

Sudden exit of Shell executive director linked to profit warning?

Jan 17th, 2014 

by John Donovan. 

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Speculation from a usually well-informed source…

Can’t help but wonder whether *Rees’ departure just days ago was because he refused to sign off on the accounts?

Bad as they were, it’s possible that the accounts would have been far worse if they had reflected the true state of affairs.

* Sudden departure of Shell global legal boss Peter Rees QC

Posted in: GoogleNews, Oil Company Profits, Peter Rees QC, Royal Dutch Shell Plc.

What The Hell, Shell? Oil Giant Warns On Disastrous Quarter

Jan 17th, 2014 

by John Donovan. 

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Royal Dutch Shell released a dreadful profit warning today. …a few more quarters like this one and the pressure will mount on CEO van Beurden to start slashing that capex and put Shell into a managed shrink-down like CEO Robert Dudley has been forced to do at BP. Earlier this week The Financial Times reported that Shell plans to divest some $15 billion worth of assets over the next two years. The magnitude of Shell’s shortcoming caught even the sharpest pencils off guard. “We’re a bit shell-shocked this morning after this profit warning… And we all remember its 2012 arctic drilling fiasco in Alaska. All told, mighty Shell is losing money on its oil and gas fields in the United States.

Christopher Helman, Forbes Staff: 1/17/2014 @ 9:46AM

Royal Dutch Shell released a dreadful profit warning today. Fourth quarter earnings are expected to come in at $2.2 billion, down from $7.3 billion a year ago. Full year earnings will be down almost 40% to $16.8 billion. Upstream earnings were off 45% year-over-year, while downstream refining earnings plunged 58%. Topping it off, in the past year Shell’s oil and gas volumes have slumped roughly 13% to 2.9 million barrels of oil (and natural gas equivalents) per day.

How could this happen at a time when oil prices have been hovering around $100 and demand for liquefied natural gas remains strong? Shell cited high maintenance expense, especially at its gas-to-liquids plant in Qatar. Deteriorating security in Nigeria also was a hit. Refining margins continued to be poor in Asia and Europe.

But perhaps the biggest single hit to earnings in the quarter was the $700 million asset impairment charge believed to be tied to Shell’s lackluster exploration venture in the Eagle Ford shale of Texas. In 2010 Shell leased a 100,000 acre ranch in south Texas from Houston oilman Dan Harrison, paying a bonus of $1 billion. Shell thought the land would help them play catch up in the prolific Eagle Ford shale. Yet after a few years of expensive drilling and fracking, Shell came to realize that that deal had been pretty much a dud. It’s also believed to have had lackluster results in the Mississippi Lime play of Kansas. And we all remember its 2012 arctic drilling fiasco in Alaska. All told, mighty Shell is losing money on its oil and gas fields in the United States.

The magnitude of Shell’s shortcoming caught even the sharpest pencils off guard. “We’re a bit shell-shocked this morning after this profit warning, which is highly unusual for an integrated oil company,” wrote Oswald Clint of Bernstein Research in a note this morning. A miss of his magnitude makes you wonder whether similar disappointments await investors in the likes of BP BP +1%, Chevron CVX +1.15%, ExxonMobil and Total TOT +0.24%. After all, Shell is not the only Big Oil playing catch up in shale plays and dealing with political uncertainty in Nigeria and elsewhere. For now, Clint thinks “this is much more Shell specific than a sector wide phenomenon.”

How will Shell turn it around? Figuring that out falls to new CEO Ben van Beurden. “Our 2013 performance was not what I expect from Shell,” he said today. “Our focus will be on improving Shell’s financial results, achieving better capital efficiency and on continuing to strengthen our operational performance and project delivery.”

When it comes to capital spending, a little improvement will go a long way. In 2013 Shell generated $40.4 billion in cash flow, but used it all up, and then some, with a remarkable $44.3 billion worth of capital spending on new projects such as deepwater developments in the Gulf of Mexico and LNG in Australia. Will all that new investment help Shell find new profitability in the years to come? Investors sure hope so.

But a few more quarters like this one and the pressure will mount on CEO van Beurden to start slashing that capex and put Shell into a managed shrink-down like CEO Robert Dudley has been forced to do at BP. Earlier this week The Financial Times reported that Shell plans to divest some $15 billion worth of assets over the next two years. At some point it just makes more sense to milk old low-cost oil and gas fields for cash rather than quixotically attempt to replace those cheap old barrels of easy oil with tough, expensive new ones.

Shares in Shell’s ADRs were off 1.2% at the market open.

RELATED

Shell Oil Axes Exec For Alaska Drilling Fiasco. Will More Heads Roll?

Posted in: Alaska, Arctic, Australia, BP, Chevron, Exxon Mobil, Forbes, Gulf of Mexico,Nigeria, Oil Company Profits, Oil Prices, Royal Dutch Shell Plc.

Shell Warning Represents Rare Reputational Blow

Jan 17th, 2014 

by John Donovan. 

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It’s been 10 years since Royal Dutch Shell PLC issued a profits warning. Back then, it disclosed massive accounting discrepancies in its reserves.Today’s fourth quarter profit warning doesn’t carry any whiff of scandal, but represents a big and rare reputational blow to one of Europe’s most dependably-performing companies.

Still, the damage isn’t as bad as the last time the company issued a profit warning on Jan 9, 2004. On that day the company’s share price fell 7.4% following the disclosure of discrepancies in its oil reserves calculation that would lead to a major management and company restructuring and unfold into one of its biggest crisis in its century-plus of pumping oil.

FULL ARTICLE

(Seems that the WSJ may have visited our website earlier today)

Posted in: Oil Company Profits, Royal Dutch Shell Plc.

Shell is not so much on fire as jumping off a burning platform

Jan 17th, 2014 

by John Donovan. 

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By Emma Haslett Friday, 17 January 2014

Shell issues shock profit warning

Shell is not so much on fire as jumping off a burning platform, after it admitted full-year profits are likely to be half what it expected.

Blimey: new Shell chief exec Ben van Beurden has barely had enough time to put the pictures up in his new office – but now he’s found himself hauled into the spotlight this morning, issuing a shock profit warning. Van Beurden seemed more surprised at what he was saying than anyone else.

FULL ARTICLE

Posted in: Ben van Beurden, Oil Company Profits, Royal Dutch Shell Plc.

New Shell boss spooks market with warning

Jan 17th, 2014 

by John Donovan. 

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By Kate Holton: LONDON Fri Jan 17, 2014 7:26am EST

Shell warns of ‘significant’ profit miss

(Reuters) – Royal Dutch Shell (RDSa.L) issued a “significant” profit warning on Friday, detailing across-the-board problems and the extent of the challenges facing the oil major’s new boss Ben van Beurden, who took over two weeks ago.

The warning comes nearly *10 years to the day after Shell, the western world’s No. 3 oil company, revealed the so-called reserves accounting scandal, when the group dramatically downgraded its reserves estimates.

FULL ARTICLE

(*COMMENT BY JOHN DONOVAN: LOOKS LIKE REUTERS VISITED THIS WEBSITE EARLIER TODAY?)

Posted in: Ben van Beurden, Reuters, Royal Dutch Shell Plc, Shell Oil Reserves Scandal.

Shell Profit Slumps

Jan 17th, 2014 

by John Donovan. 

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By Brian Swint and Eduard Gismatullin Friday January 17, 2014

Royal Dutch Shell Plc (RDSA) said profit plunged because of deteriorating refining markets and mounting losses in the Americas, surprising investors with an early earnings report that wiped out $10 billion in shareholder value.

“It’s a shock,” Jason Kenney, an analyst at Banco Santander SA in Edinburgh, said today by telephone. Shell had “to pre-announce to get the market to reality, but even so it’s a very weak set of results.”

FULL ARTICLE

Posted in: Bloomberg, Business Week, Oil Company Profits, Royal Dutch Shell Plc.

Royal Dutch Shell issues shock profit warning

Jan 17th, 2014 

by John Donovan. 

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Friday 17 January 2014

Shell dropped a bombshell on investors after warning that fourth quarter profit will be “significantly” lower than last year, blaming low production, high exploration costs and continuing problems with refining.

“It’s not good. When you’re talking about higher costs and lower production volumes, it’s a lethal combination,” said Nick Xanders, who heads European equity strategy at BTIG, the trading and brokerage firm.

FULL ARTICLE

Posted in: Oil Company Profits, Royal Dutch Shell Plc, The Independent.

Royal Dutch Shell Profits Slump Debacle

Jan 17th, 2014 

by John Donovan. 

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Based on our insider information, we, and only we, raised the question of whether Royal Dutch Shell CEO Peter Voser jumped ship or was pushed. I think we now have the answer that explains his unexpected early retirement under the cloak of a change of lifestyle. How do you know that Shell is run by clowns? The continued existence of this website over the last decade proves that this is the case. One miscalculation after the other.

By John Donovan

I would like to put a simple question to our visitors.

What news source has provided the most accurate assessment about Royal Dutch Shell Plc and the senior management?

Not the BBC, The Wall Street Journal, the Financial Times, The Guardian, The Telegraph, The Motley Fool or any other source. Certainly not shell.com.

The most accurate assessment and information has consistently emanated from this website.

Not because I am a financial genius (far from it) but solely due to the insider information that has proven to be so insightful and accurate.

I merely provide the platform.

Based on our insider information we, and only we, raised the question of whether Royal Dutch Shell CEO Peter Voser jumped ship or was pushed.

I think we now have the answer that explains his unexpected early retirement under the cloak of a change of lifestyle.

How do you know that Shell is run by clowns? The continued existence of this website over the last decade proves that this is the case. One miscalculation after the other. We even operate under the top level domain name that Shell failed to secure despite issuing proceedings against us and as a result process job applications and deal with other matters, including business proposals on behalf of Shell. Would you want your so called No1 enemy to be in that position? You could not make it up.

Now we will see if Big Ben van Beurden has any more gumption that his hopeless predecessors, Sir Philip Watts, Jeroen van der Veer and Peter Voser, all three, like the current CFO Simon Henry, tainted by financial scandal, but still allowed to remain at the helm of Shell for years. What a role call. Will Voser become a priest?

COMMENT RECEIVED 

John

Shell has either learned or been told when they have to give a profit warning. Interestingly, after their adamant refusal to acknowledge the fact when Q2 results were issued, the market judgement for Q4 was a share decrease of only 3.3% compared with a decrease of 5.32% for Q2. Proof enough that they should also have issued profit warnings for Q2 and Q3?
 
Perhaps London Lad might like to comment on that or is his head well below the parapet?

RELATED COMMENT RECEIVED 2014/01/17 at 14:28 FROM KEITH RICHARDSON

Most of your contributors seem to have worked for Shell in the past. Seems to me that they were happy to take the money until they were released. Perhaps some unbiased contributors would be in a better position to discuss issues.

COMMENT ON SHELL BLOG BY “AN OLD EP HAND”

John, how often have our directors in the past claimed huge successes in times of high oilprice and then modestly (in small print and low voice) stated that whatever they do will only be visible some 10 years later?

In bad times they always reminded us in fat print and booming speeches that it was not their fault and inferred it was the result of bad decisions some 10 years earlier. But from now on things would be fine, we would change and all would be well and they could still claim huge bonusses.

But let’s check back, who were in charge some 10 years ago? YES: the bully astronaut who had seen the future and liked it and the brain with the beard who predicted Shell would be producing 6-6.5 million BOE in 2014. (I believe he is now trying to make the trains in the UK run on time.)

I guess there is no real chance they hand back there ill gotten bonusses? Or give these to charity?

It is clear your job is not finished!

Posted in: Ben van Beurden, GoogleNews, Jeroen van der Veer, John Donovan, Peter Voser, Royal Dutch Shell Plc, Shell Oil Reserves Scandal, Simon Henry.
Tagged: Ben van Beurden · Jeroen van der Veer · John Donovan · Oil · Peter Voser ·Royal Dutch Shell Plc · Sir Philip Watts

Royal Dutch Shell issues profit warning

Jan 17th, 2014 

by John Donovan. 

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Oil giant Royal Dutch Shell has issued a profit warning after it made less money than expected in the final quarter of 2013. “Fourth-quarter 2013 figures… are expected to be significantly lower than recent levels of profitability,”; Shell’s shares fell more than 4% at the beginning of trading in London.

17 January 2014 Last updated at 08:26

Oil giant Royal Dutch Shell has issued a profit warning after it made less money than expected in the final quarter of 2013.

“Fourth-quarter 2013 figures… are expected to be significantly lower than recent levels of profitability,” the company said in a statement.

It now expects profits for the quarter to be about $2.2bn (£1.3bn) and profits for 2013 as a whole to be $16.8bn.

Shell’s shares fell more than 4% at the beginning of trading in London.

Profits for 2013 are expected to be down significantly on 2012, when it made $27.2bn.

“Our 2013 performance was not what I expect from Shell,” Shell chief executive Ben van Beurden said in a statement.

“Our focus will be on improving Shell’s financial results, achieving better capital efficiency and on continuing to strengthen our operational performance and project delivery.”

Mr van Beurden became chief executive at the beginning of this year, taking over from Peter Voser.

Shell said its profits in the fourth quarter were hurt by a range of factors, including higher exploration costs, security problems in oil-rich Nigeria, and maintenance work that hit oil and gas production.

It said the weakening of the Australian dollar also had an effect.

Expected profits of $2.2bn for the quarter include impairments of $700m. When these are discounted, the expected profits are $2.9bn.

SOURCE

Posted in: Ben van Beurden, Oil Company Profits, Peter Voser, Royal Dutch Shell Plc.

ROYAL DUTCH SHELL PROFITS WARNING DEBACLE

Jan 17th, 2014 

by John Donovan. 

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Message from one of our sources…

John

How many warnings did we give about taking the financial hits in the final quarter before Voser left?

And yet the analysts are surprised!

(AND THIS MARKET SHOCKING NEWS ALMOST EXACTLY TO THE DAY, ON THE TENTH ANNIVERSARY OF WHEN NEWS FIRST BROKE OF THE ROYAL DUTCH SHELL RESERVES SCANDAL)

Posted in: GoogleNews, Oil Company Profits, Peter Voser, Royal Dutch Shell Plc, Shell Oil Reserves Scandal.

Shell shares open down 3.3 percent after profit warning

Jan 17th, 2014 

by John Donovan. 

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Jan 17 (Reuters) – Royal Dutch Shell PLC :

* Shares open down 3.3 percent after profit warning

Posted in: Oil Company Profits, Reuters, Royal Dutch Shell Plc.

Shell warns of plunge in profits

Jan 17th, 2014 

by John Donovan. 

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Jan 17 2014

Shell (RDS.A) has warned that it expects its Q4 profit to be “significantly lower than recent levels of profitability,” with the company estimating that adjusted earnings on a current cost of supplies basis will plummet to $2.9B from $7.3B a year earlier. Consensus is for $4B.

Shell cited oil and gas prices, “weak industry conditions in downstream oil products, higher exploration expenses, and lower upstream volumes” as reasons for the drop in earnings.
    
Shell is due to publish its full results on January 30. (PR)

SOURCE

Posted in: Oil Company Profits, Royal Dutch Shell Plc.

Oil giant Shell in surprise profit warning

Jan 17th, 2014 

by John Donovan. 

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Shell has seen 3.9% wiped off its share price since markets opened a few minutes ago.

• Shell Q4 2013 profits £2.9bn against £4bn expectations

• ‘Not what I expect from Shell’ – chief executive Ben van Beurden

Jennifer Rankin:  theguardian.com, Friday 17 January 2014 08.19 GMT

To start the day, we have a surprise profits warning from the world’s second largest oil company, Royal Dutch Shell. The company has said that its fourth quarter 2013 results are likely to be “significantly lower” than recent levels of profitability.

Earnings for the fourth quarter of 2013 are expected to be $2.9 billion (£1.8bn), compared to analysts’ expectations of $4bn.

Shell is blaming “weak industry conditions in downstream oil products, higher exploration expenses and lower upstream volumes”.

‘Not good enough’ is the message from Ben van Beurden, Shell’s chief executive who took over two weeks ago.

Our 2013 performance was not what I expect from Shell. Our focus will be on improving Shell’s financial results, achieving better capital efficiency and on continuing to strengthen our operational performance and project delivery.

Although analysts are expecting UK markets to open up, Shell is the largest company on the FTSE 100, so could weigh the rest down.

SOURCE

Posted in: Beaufort Sea, Oil, Oil Company Profits, Royal Dutch Shell Plc, The Guardian.
Tagged: Oil · Royal Dutch Shell Plc

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