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Big Oil Heads for Back-to-Back Profit Triumphs as Fortunes Turn by Joe Carroll https://www.bloomberg.com/news/articles/2017-04-28/exxon-profit-beats-expectations-with-boost-from-overseas-oil ‎28‎ ‎April‎ ‎2017‎ ‎13‎:‎20 Updated on ‎28‎ ‎April‎ ‎2017‎ ‎20‎:‎26 U.S. supermajors exceed analysts’ estimates with cost cuts Chevron turns corner after worst annual performance since 1980 ----------------------- Fresh off Big Oil’s best quarter in years, Exxon Mobil Corp. and Chevron Corp. may be poised for a repeat. One-third of the way into the second quarter, crude prices -- the prime driver of explorers’ profits -- are 25 percent higher than a year ago. If global supplies continue to contract and demand inches up through the end of June, the two dominant U.S. drillers will book a second straight quarterly victory in late July or early August. Already, analysts are forecasting profit blowouts even larger than those registered when Exxon and Chevron disclosed first-quarter results on Friday. Exxon is seen lifting per-share earnings by 132 percent while Chevron is expected to post its biggest second-quarter profit in three years. “It’s cutting costs, it’s getting more for every dollar you spend, it’s getting more from each well and getting it out faster,” said Brian Youngberg, an analyst at Edward Jones & Co. in St. Louis. “It just shows how these companies have had to adapt to a new environment.” Exxon, the world’s biggest oil producer by market value, earned 95 cents a share during the first quarter, outperforming all but one of the 19 analysts’ estimates in a Bloomberg survey. Chevron, the second-largest U.S. driller, swung to a profit in a big way, scoring its largest quarterly gain since 2014 and a per-share result that was 64 percent higher than the average estimate. Brent crude, the benchmark for most of the world’s oil, has averaged $53.82 a barrel since the current quarter began on April 1, compared with $43.10 a year earlier, according to data compiled by Bloomberg. Production Drop As charter members of the elite supermajor clique that also includes Royal Dutch Shell Plc, BP Plc and Total SA, Exxon and Chevron are among the biggest beneficiaries of the escalation in crude prices. Total reported a 56 percent profit increase on April 26 and if the trend holds, Shell and BP would post impressive results next week. Exxon’s profit surged even as oil and natural gas production fell 4 percent from the same period last year, according to a statement from the Irving, Texas-based company Friday. Exxon cut capital and exploration expenditures in the quarter 19 percent to $4.2 billion. “In both cases, the earnings beat was largely from realized pricing rather than production,” said Pavel Molchanov, an

Goldman's Currie Sees High Chance OPEC Will Extend Output Curbs Goldman's Currie Sees High Chance OPEC Will Extend Output Curbs https://www.bloomberg.com/news/articles/2017-04-26/goldman-s-currie-sees-high-chance-opec-will-extend-output-curbs With a deal, WTI oil seen trading in $55-$60 a barrel range Currie sees backwardation developing in crude market ------------------------ There’s a high probability that OPEC will agree to extend crude production curbs aimed at draining excess global supply, according to Jeff Currie, head of commodities research at Goldman Sachs Group Inc. On a scale of 1 to 10 the chance of a deal is a 6 or 7, Currie said in an interview on Bloomberg TV. The Organization of Petroleum Exporting Countries is meeting on May 25 to discuss the curbs. West Texas Intermediate crude would trade in a $55- to $60-a-barrel range if the accord is extended, which is an "substantial upside, given we are trading at roughly $49.50" a barrel, Currie said. There would be a $3-to-$5 downside risk if there’s no deal to prolong the cuts. Goldman’s "focus is on the term structure" more than on oil’s price. They’re looking for a backwardated market, where short-term prices are at a premium to those for later delivery.

£40 for Shell in the medium term is insane. Over the next 36 months, perhaps growth to around £28/£30 if poo stabilises in the $60 to $70 range and LNG trends higher also. And if Sterling tracks down to and maintains the $1.15 to $1.20 range then RDSB will be a diamond dividend stock to be owning. But £40. No. That will take a much longer timeframe or a huge spike in energy prices. Agreed though that Shell is a conviction BUY. FJ

http://www.cnbc.com/2017/03/31/one-of-the-worlds-best-known-oil-traders-is-predicting-prices-to-recover-to-70-a-barrel.html Oil prices are not capped around $55 as is widely assumed but rather are on track to hit $70 per barrel later this year, according to Pierre Andurand, managing partner at Andurand Capital Management. We're currently at a crossroads from where oil prices should significantly rebound, Andurand told CNBC on the sidelines of an event Thursday evening where he was crowned the winner of the EMEA Investor's Choice Awards for 2017. "I think oil prices are likely to recover to around $70 … I think the market will switch to backwardation – sustainable backwardation – by late summer and that will bring the next wave in oil prices," he said, referring to the situation where nearer-term spot price oil contracts are more expensive than longer-dated forward contracts. Andurand is widely known for his bearish call on oil prices in the mid-2000s, delivered ahead of the drastic sell-off which saw WTI prices plummet from close to $150 in July 2008 to trade in the $30s a mere five months later. Hence why his switch from oil bear to oil bull has particularly caught the market's attention. Andurand worked up his position last year and said that while he has been surprised by the somewhat rangebound nature of trade so far in 2017 – indeed, during the first two months of this year his fund position suffered from being caught off-guard by this dynamic - he believes there is a solid explanation for why it will not persist. "U.S. shale producers have been hedging a lot of their production, capping prices, so the improvements in fundamentals were not priced in at all, but I believe that now when people will really see that inventories are going down fast, that eventually the fundamentals will win and prices will go higher," he suggested. With regards to the "will they or won't they" question front-and-center of market participants' minds, Andurand claims that the final decision on whether oil producers will extend their agreement to stem output levels when it comes up for renewal on May 25 is down to the price level. The agreement signed last November between both OPEC and non-OPEC oil producers setting caps in order to control the amount of supply unleashed onto the market is currently the subject of intense speculation as to whether it will be deemed by participants to have been sufficiently successful to justify a renewal. "I think if we are roughly at these kind of prices or a few dollars higher I think they will extend it. If we're at $65, they probably will not," the French hedge fund manager opined. "But I think we will be higher by then because it will be obvious to everybody that inventories are going down and the OPEC cut really worked," he added. .....

Re Woody All you need to do is to ask investors in his most recent IPO effort - Woodford Patient Capital Trust PLC. Lol. What a performance! Fully negative returns during a bull cycle. Feck me that requires some Patience. :) Statement: Shell's global core business is now approaching or even less than 50% oil. Discuss: Do you agree? If so, is this a driver for yet higher ROCE over the next 5 years? Will the dividend resume its historical currency-neutral annual increase of 4.4% shortly? Boosted even further for those receiving Sterling equivalents as we start to leave Europe? Disclaimer: I am RDSB long, and have added 3 further long positions early this morning. Mostly paid for by 3 separate accounts of dividend income from RDSB. Plus a few quid of my own snuck into my SIPP just before year end. Position: Never sell Shell FJ :)

http://www.aol.co.uk/money/2017/03/16/where-will-royal-dutch-shell-plc-be-in-10-years/ Where will Royal Dutch Shell plc be in 10 years? Given recent oil price woes, it may be surprising to find out that Shell(LSE: RDSB) has outperformed the FTSE 100 in the last decade. Its shares have risen by 31%, while the wider index is up 18%. And when dividends are added to the mix, Shell's relatively high yield has made it a significantly superior investment to the FTSE 100 in the last 10 years. Could more outperformance lie ahead over the next decade? A changing company In terms of where Shell will be as a business in 10 years, the chances are that it will be financially stronger. Its acquisition of BG Group is expected to push free cash flow significantly higher, with $25bn expected by 2020 if oil remains at around $60 per barrel. This compares to free cash flow which has averaged just $5.2bn per annum in the last three years. This improving cash position should provide the company with a wide range of options. Firstly, it could increase dividends per share at a rapid rate. Shell already yields around 6.7%, so any increase to its dividends could cause investor sentiment to rapidly improve. A higher dividend could make the company one of the highest-yielding blue chips around, which at a time when inflation is set to move higher could lead to a rapidly rising share price. Secondly, Shell could use its improved free cash flow to make acquisitions. It has already bought BG Group in one of the most significant Oil & Gas acquisitions of all time. So far, the integration process has been successful and if it continues to remain on track, it could encourage Shell to buy additional assets in future years. As well as strong and improving cash flow, the company also has a debt-to-equity ratio of just 49%. This indicates that other major acquisitions could be entered into within the next decade without compromising the company's financial stability. The Oil & Gas industry Of course, Shell's future will be largely dictated by the price of oil and gas in future years. Its free cash flow estimates assume an oil price of $60 per barrel, which may prove to be a somewhat conservative estimate. In the developing world, demand for oil and gas is likely to rise significantly in future years, as wealth levels rise and the use of cars, as well as demand for energy, increases. Similarly, the Trump administration may relax regulations on fossil fuels and make the switch towards greener fuels much slower. This could mean that demand for oil is higher than previously forecast, which could force its price higher. As such, Shell's profitability may surprise on the upside in the next decade. Share price The outlook for Shell appears to be hugely positive. It seems to have internal and external catalysts to push its share price higher. It also offers an exceptionally high income return which could move even higher if free cash flow rises as for

dananzi, Whilst I'd agree that it would be like having every Xmas coming together to get another chance of a lifetime to buy Shell at less than £20, I won't be gambling on that rather short odd like your good self. The 7% yield remains 100% solid and is superb value at the current very low share price. I was going to wait until after we receive our next bumper dividend payments in a couple of weeks to recycle into further long position builds in my brokerage, ISA and SIPP accounts. But I feel that the prevailing share price looks unsustainable at these current depressed levels. Sadly, I doubt that I'll be able to snag the current low of £21.83 tomorrow, but if that price is anywhere near available then I'll be buying a bunch of RDSB ahead of March 27th from cash into in my brokerage account and then back-filling that cash when we receive our dividends. Of course, if scrip election was directly available on RDSB to build RDSB rather than RDSA, then I wouldn't have this fun each quarter, eh? :) Happy days. FJ :)

Misca, May I commend you Sir (or, with apologies for my reckless presumption, Madam), on a superbly constructed post. Well done. I shall be rather happily retaining my RDSB positions through the current energy up-cycle that is building momentum during 2017/18. These are happy times, whatever the day-traders, shorters and dark-pool algorithmic-posters deem transiently tradable, micro-second by micro-second on a mindless technical graph. Every single Quarter next year for Shell is set to be a game-changer (to the positive) year-on-year. And unlike BP, Shell is already heavily profitable at current prices without needing the price massaging up to the $60 mark that Opec has set as a target and that BP require given their current expanded capex. So - as ever - Shell is the conviction buy - just ask Goldman Sachs. FJ :)

Shorter - why did you choose a random headline? Can we all have a go? Are you broke yet on your FTSE100 short?

Shell, BP to reveal Q4 income surges, analyst says https://www.energyvoice.com/marketinfo/129178/shell-bp-reveal-q4-income-surges-analyst-says/ Written by Mark Lammey - 19/01/2017 7:22 am Oil majors Shell and BP are expected to reveal large increases in fourth quarter earnings next month, an analyst said yesterday. Biraj Borkhataria of RBC Capital Markets estimated BP would record a net income of $1billion in Q4, up from $200million the previous year. Mr Borkhataria said the firm’s production would edge up during the quarter due to lower seasonal turnaround and maintenance activities, though downstream margins will be under pressure. He predicts outgoings related to the 2010 Macondo disaster will come to $1.5billion for the three months. Shell’s net income will go up 78% year-on-year to $2.8billion for the last three months of 2016. Mr Borkhataria said Shell will have cashed $2.7billion from asset sales in Canada, the Gulf of Mexico, Malaysia and Japan in Q4. The company is in the midst of a $30billion divestment programme which is slated to run through 2018. Commenting on the global oil and gas industry in general, the coming months should highlight continued cost and capex deflation, Mr Borkhataria said. He expects capex for majors to total $123billion in 2017, 8% lower than in 2016 and 50% down on 2013, when spending peaked. RBC also thinks investors could switch their focus to growth, against the backdrop of the oil price recovery, which could have implications for the mergers and acquisitions market.

It could be a good week ahead for Shell. It is clear that share prices of FTSE100 constituents that earn profits in dollars but report in pounds sterling have benefitted since the Brexit vote as the pound significantly weakened against the dollar. So it would seem reasonable to expect that further movements will be similarly reflected both in the base share prices and any dividends paid of such companies. Just today in the Sunday Times there was an article entitled Theresa May calls for ‘clean and hard’ Brexit . Within that article it was stated that Downing Street staff expect her words to cause a “market correction” that could lead to a fresh fall in the pound. This could give an immediate lift to shares such as RDSB. Let's see shall we? All the best, FJ :)

Oh har-de-har. :) Can anyone here name the genius who over the last 18-plus months since launch - and including the last full 12 months of a strong bull market - has seen his fund apparently still hoping one day to hit the heady heights of its break-even-from-IPO price. And is currently way short of even that feeble goal. And who apparently criticises a stock that has risen by 50% in the same period - plus paying healthy dividends unlike his "offering". You couldn't make it up. Or laugh at the selections shorters choose to use in their desperate negative, downside ramps.

Hi Omerta, Yes - as Bigbadbaz confirms - since April 2016, we each have a very generous allowance of £5000 of tax free dividend income per annum. On top of that, 100% of all dividend income is also tax free when sheltered in an ISA or in a SIPP. Every decent UK based investor should seek to shelter income in these ways if at all possible. All the best, FJ :) PS Seasons greetings to jul71252

jul71252, Well done. Not a bad profit at all in just a few days. That's very good to see ahead of Xmas. Happily, my Shell holding also pays me more than that each and every month, bundled into nice quarterly, tax-free dividends (ISA and SIPP sheltered, plus use of the handy £5K pa dividend income allowance). And I don't have to do any trading whatsoever - except occasionally re-investing some of those dividends. Life is good. Of course, this excludes consideration of any capital gains / losses, but I expect way more upside than downside during the period 2017 through to 2020. On a more immediate outlook, I note that on the bearish side that Brent is down just over 1.5% today. On the bullish side LNG is up by over 10% today and that Sterling has been softening against a stronger dollar recently. Overall, I'd say Happy Days. And a very Happy Xmas to you - enjoy your profits. All the best, FJ

I'd add my comments to the original question ... Hopefully (and selfishly) there'll be no move upwards whatsoever tomorrow as I'm waiting to re-invest this coming Friday's dividends as soon as the payments are cleared, but I fear a 60p to 70p move north for Shell tomorrow to around the £22.50 area. By the end of next week we could be seeing Brent Crude breaking $60 and WTI Crude pushing the $57 barrier. Short-term predictions are always precarious since an array of other factors (especially currency movements) can skew expected outcomes. However, if those sort of prices are sustained (or indeed exceeded) through the next 2 fiscal quarters to when Opec formally first monitor the progress of the deal on 25 May, we could be seeing Shell finally recovering some of its true value that been masked over the last 24 months - so I'll pencil in £25 for RDSB by June. I noted this weekend that Bank of America’s forecast for crude by mid-2017 is $70. In that scenario, the price above for RDSB by June may well seem cheap. All the best, FJ :)

http://www.bbc.co.uk/news/business-38276667 Non-Opec countries agree to cut oil output Eleven oil-producing countries, who are not members of the Opec oil cartel, have agreed to cut their output to boost prices. The group of states, which includes Russia, said on Saturday that they will cut supplies by 558,000 barrels per day. Opec announced last month that it would be slashing its own production to ease an oversaturated global market. It is the first time in 15 years that a global pact has been struck. "I am happy to announce that a historic agreement has been reached," said Qatar's Energy Minister, Mohammed Bin Saleh Al-Sada, whose country holds Opec's rotating presidency. The agreement was made at a meeting at Opec's Vienna headquarters. Opec, the Organization of Petroleum Exporting Countries, has already committed to halting the supply of 1.2 million barrels a day, starting from January. Opec said then it was seeking for non-member states to also lower their output, and Russia had signalled it would co-operate. The moves come after more than two years of depressed oil prices, which have more than halved since 2014, due to a supply glut on the market. Among the non-Opec countries attending the meeting were Azerbaijan, Oman, Mexico, Malaysia, Sudan, South Sudan and Bahrain. Opec will also have its next meeting on 25 May 2017 to monitor the progress of the deal.

To the Shorter testpack3, I really wish that you were right. My fear is that we will never have the chance again to buy Shell sub-£20. Something that I've massively enjoyed doing over the last 20 months. Shorter - I don't know why you try to keep your dividend scare story going - we all know the dividend is 100% safe. Recall: He [Shell CEO] also told the newspaper that there would be no changes to Shell's dividend policy, even though pay-outs at the current level outstripped the company's cash flow. "(Shareholders) want a stable dividend. We must be seen as reliable," he said. Even with oil at $47 a barrel, the company could make adequate investments with current dividend levels, he said, adding that only a slight increase in demand could send prices up again, since even at the peak of U.S. shale production, there was only a 2 percent global surplus. ===== That was at $47, not today's $54 or next year's potentially way higher still oil and RDSB share price. I fear I'll be paying £25 per share very soon and well over £30 in the next 2 years. The bargain days are slipping away back towards a fair value play on dividend yield. So I'll be stashing as many away as possible over the next 6 months before that occurs. Shorter - please keep adding your sell options to help damp this fire down. Many thanks, FJ

http://in.reuters.com/article/shell-climatechange-idINL8N1DR06K Shell CEO expects no valuation hit from climate accord * Climate accord will not hit reserve valuations, boss tells newspaper * Shell expects to produce all currently listed reserves * Energy giant plans no change to dividend policy Extract He also told the newspaper that there would be no changes to Shell's dividend policy, even though pay-outs at the current level outstripped the company's cash flow. "(Shareholders) want a stable dividend. We must be seen as reliable," he said. Even with oil at $47 a barrel, the company could make adequate investments with current dividend levels, he said, adding that only a slight increase in demand could send prices up again, since even at the peak of U.S. shale production, there was only a 2 percent global surplus. ============================ There we have it. A definitive statement by the Shell CEO that the current dividend is both safe and secure even with oil prices as low as the current $47. And with today's historic OPEC deal, we could well be seeing sustained oil prices well above £47. Oil is up over 9% so far today as I type. So let's have no more rubbish from shorters on this topic. Many thanks.

.... continues. ---------------------- During a recent oil conference in London, virtually all industry players (including Saudi's oil minister and the CEO of TOT) warned about the risk of oil supply shortage before the end of the decade. Except Rex Tillerson of XOM. He believes that oil shale in North America can respond quickly enough to resolve any potential global oil supply shortage, even at long-term low oil prices. I disagree. Oil shale in North America will indeed respond, but on its own it will not be enough to rebalance global supply and demand. Other sources of new supply will also be required and such other sources won't be developed at low oil prices. National government budgets in Middle East can also not be sustained at long-term low oil prices. Sooner or (probably) later OPEC might come back to life. My wife and I have invested around half of our current/liquid wealth in RDSA and intend to hold this (and reinvest its 7.5% dividend yield) in order to fund our children's university in due course. In the long-run, we believe RDSA will deliver more than dividend alone. We may be wrong, but if we are, it will cost us personally. 06 Nov 2016, 07:00

I came across the following interesting post earlier by a chap called lexbacker on seekingalpha.com. It may be worth a read for some on this BB. FJ --------------------------------------- I work at Shell, where I was in charge of the strategy department of Upstream International from 2012-2015. This comment is written by me on personal title, for information purposes only. It does not necessarily reflect Shell's opinion, and it is not intended to encourage you to trade, buy or sell RDSA or RDSB. We are currently still right in the middle of executing a "swap separated in time" (acquiring BG and then divesting $30bln of multiple non-core portfolio assets in the period 2016-2018). In parallel we are materially reducing the operating cost structure of the business, demonstrating investment capital discipline, and focusing our growth portfolio on deepwater oil and chemicals, where we believe we enjoy a sustainable competitive advantage. The growth focus on chemicals is also intended to maintain our upstream-downstream balance in our integrated company. This balance may have shifted a bit towards upstream with the acquisition of BG which contained no downstream assets. In parallel we are reducing our CO2 footprint and gradually positioning for New Energies. Although I expect more volatility in the short term (oil price, staff redundancies, natural gas price), I strongly believe that we are acting in the best interest of our shareholders. Our CEO is adamant what he wants to reshape Shell into a world-class investment case, and frankly we all work towards that aim. I read it to mean long-term delivery of both dividend and a rising share price, whereas our delivery of shareholder value in the past two decades may have primarily been achieved via dividend. Well before the end of this decade, I believe oil price will reach a level that encourages enough investment in new oil and gas supplies. Lead times of oil and gas project is around 3-4 years between investment decision and the project coming onstream. Hence, upstream projects coming onstream today took their final investment decision before the oil price collapsed in 2014. The industry started to substantially reduce its investment levels in 2015. From 2018 onwards we will see far fewer new projects coming on stream, against a backdrop of gradually rising global oil demand. Prices are likely to respond to this at some point.