Oil Companies in focus

17th December 2018.

Shell’s first half profits rose 36% to $10.3bn on an underlying basis. Higher oil & gas prices boosted results in the Integrated Gas and Upstream divisions, partially offset by lower margins in Downstream and increased costs across the group. The quarterly dividend remains unchanged at $0.47 a share, with Shell also announcing a $25bn share buyback to be completed over the 2018-2020 period.

BP has spent the past eight years addressing big problems, with first the Gulf of Mexico disaster and then the oil price crash throwing the group into disarray. Deepwater Horizon payments are still soaking up mind boggling sums, $2.9bn so far this year, but are finally starting to shrink. New oil fields are coming online, with the extra production supporting cash generation in Upstream.

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Oil Companies in Focus: Royal Dutch Shell B&B

ROYAL DUTCH SHELL PLC B SHARES (RDSB)

Oil Company Report November

Shell’s first half profits rose 36% to $10.3bn on an underlying basis. Higher oil & gas prices boosted results in the Integrated Gas and Upstream divisions, partially offset by lower margins in Downstream and increased costs across the group. The quarterly dividend remains unchanged at $0.47 a share, with Shell also announcing a $25bn share buyback to be completed
over the 2018-2020 period. There’s been a lot to like in Shell’s recent results, with all the major metrics heading in the right direction. Profits may not be quite what was hoped for this time out, but that’s a minor setback. Having nursed the dividend through the bad times, Shell’s now got the cash to reward shareholders for their loyalty, starting with a $25bn buyback at $2bn a quarter. The driving force behind progress has been a dramatic improvement in oil prices, but Shell deserves credit too. Operating expenses have been kept under control, and the group has been managing down capital expenditure while still adding more than enough to reserves to replace production last year. Market conditions are improving, and there should be scope for more cost savings and production increases. That would drive profits and free cash higher.

BP PLC (BP.)

Oil Company Report October

Underlying profit in the third quarter more than doubled to $3.8bn (2017: $1.9bn), with both Upstream and Rosneft delivering substantial growth thanks to higher oil prices. Underlying profit before tax and finance costs rose 91% to $6.7bn. announced the acquisition of $10.5bn of US shale assets from BHP. Improved cash generation means BP now expected to fund the entire
BHP US shale deal with available cash and no longer intends to issue new shares. The quarterly dividend of 10.25 cents per share is 2.5% ahead of last year.

BP has spent the past eight years addressing big problems, with first the Gulf of Mexico disaster and then the oil price crash throwing the group into disarray. Deepwater Horizon payments are still soaking up mind boggling sums, $2.9bn so far this year, but are finally starting to shrink. New oil fields are coming online, with the extra production supporting cash generation in Upstream. Meanwhile the Downstream business, which has been BP’s rock throughout much of the oil downturn, continues to deliver excellent results ahead of expectations. With profits now firmly back in positive territory, the focus has turned to cash. BP reckons it can match its cash in to cash out with oil at $50 a barrel. The group’s also flexing its financial muscles in M&A, with the acquisition of a huge shale portfolio from BHP. An existing US onshore business, in which it has achieved some impressive cost savings, should give BP the expertise and opportunity to
achieve $350m in planned cost and revenue synergies.

 

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