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Negative Points: The group continues to see significant energy price volatility as a result of economic and political developments. Group earnings, on a current cost of supplies (CCS) basis, were $6.1 billion compared with $7.2 billion in the same quarter a year ago. Management noted that "Nigerian output has been cut by about 20,000 barrels per day in the fourth quarter due to flooding in the Niger Delta, and this could increase." Governments across the world continue to try to advance their share of the profits, whilst elements of the group's production (oil sands) generate higher costs than more traditional sources. The company's operating activities can be severely disrupted by the effects of natural disasters or industrial accidents. Changing political forces can affect Shell's pace of development activity in any country in which it operates. The company has interests in a number of Middle Eastern countries.

Financial Highlights: Quarterly earnings declined to $6.1 billion down from $7.2 billion in Q3 2011 – excluding the changing value of inventory. Group gearing at the end of the quarter was 8.6%. The quarterly dividend has been increased by 2.4% compared to Q3 2011.

Third quarter results: Royal Dutch Shell (A) surprises to the upside Despite a decline in profits, the results came in at the upper end of analyst forecasts. The Chief Executive noted that "our earnings were driven by lower oil and gas prices, and lower chemicals margins, which offset the benefits of our operating performance, underlying growth in oil and gas production, and higher results in Integrated Gas and Oil Products." Management went on to note that "We continue to refresh our portfolio" whilst also highlighting the company's continuing capital efficiency drive - selling down positions where others can add more value. The group has announced around $6 billion of acquisitions and new acreage and also around $6 billion of asset sales in 2012, moves which management believe will better position Shell for growth. In all, whilst concerns for global economic health currently weigh, management continues to take action in order to hopefully improve company prospects. With its cash generative nature underpinning shareholder returns - the quarterly dividend was increased by 2.4% -

Company overview Royal Dutch Shell PLC is a major global oil and natural gas exploration, production and marketing company. In addition, it is a producer of chemical products. The Group has operating companies in more than 90 countries worldwide. Employing just over 100,000 employees, the group estimates that it delivers 2pc of the world’s oil and 3pc of its gas needs. Approximately 44,000 Shell service stations operate worldwide, whilst some 35 refineries and chemical plants are in operation. The group is headquartered in The Hague, the Netherlands, but incorporated in England and Wales.

Oracle Coalfields' (LON:ORCP) advanced Thar coalfield project in Pakistan could help address the country's energy crisis, says Seymour Pierce, which has started covering the stock. Thar is believed to contain around 175 billion tonnes of undeveloped low ranking thermal coal, said analyst Asa Bridle, who rates the shares a 'buy'. If financing can be secured, development could begin next year with full production by 2016. The firm's first half saw the landmark signing of a joint development agreement with the Karachi Electric Supply Company. The plan is to develop a mine-mouth 300MW power plant, with the provision to increase its capacity to 1100MW. And in September, Oracle cut the predicted cost of the project after a new plan cut the upfront costs to US$463 million, almost half the original, largely through slashing the capex bill and reducing the planned output to 2.4 million wet metric tonnes per year from 5 million. That decision slashed US$434 million from the original budget, while the predicted costs of production have also fallen from US$42 per wet metric tonne to US$24 per wet metric tonnes over the life of the mine. Bridle notes that Pakistan is a frontier market and clearly represents significant sovereign risk but it has a growing economy and is slowly changing from its traditional agricultural base. "However, growth is being impacted by the recurrence of the energy crisis which dogged the country in the late 1980s and early 1990s," he notes. The government therefore is focused on developing its domestic energy sources, such as Thar, to increase capacity and reduce its reliance on imported fuels. Based on a resource-based valuation created by Oracle’s London-listed pre-production peer group as project financing in still pending, the broker values Oracle at 11 pence a share. This is still more than five times the current share price of 2.13 pence, notes the analyst.

The first-half of the financial year marked Oracle Coal’s (LON:ORCP) transformation from explorer to project developer. The period saw the Pakistan focused group secure a mining lease for Block VI of the Thar Coalfield in Sindh Province. Another landmark was the signing of a joint development agreement with the Karachi Electric Supply Company. It plans to develop a mine-mouth 300MW power plant, with the provision to increase its capacity to 1100MW. “[This] is an important milestone in the development of the company as it gives us an identified customer to focus upon,” said chief executive Shahrukh Khan. “The board is convinced that the project is technically and commercially sound, and believes there is strong support in the local power generation sector to develop the coal mine in Block VI. “We remain committed to pursuing the project and to delivering on forthcoming milestones." Earlier this month Oracle slashed the predicted cost of its Thar coalfield and power station project, where mining is expected to start in 2014. A new implementation cut the upfront costs to US$463 million, almost half the original, largely through slashing the capex bill and reducing the planned output to 2.4 million wet metric tonnes per year from 5 million. That decision has cut US$434 million from the original budget, while the predicted costs of production have also fallen from US$42 per wet metric tonne to US$24 per wet metric tonnes over the life of the mine. Oracle say the project is now targeted to return 20.5 per cent, based on the tariffs recently published by the Pakistan National Electricity Power Regulatory Authority for electricity produced from coal. Initial production of about 1 million wet tonnes per annum of lignite coal is expected to commence in 2014, with full production of 2.4 million wet tonnes per annum expected from 2015 onwards. The lignite requirement for a 300MW power station has been estimated at 2.2 million wet tonnes per annum, which gives Oracle sufficient reserves to support a 300MW power plant for 50 years. Like all companies in this phase of development, Oracle was loss-making. The operating loss was £408,423. In a statement today it said: “The group will be requiring additional funds to cover its working capital needs for the next six months and is therefore considering a number of options and strategies in respect to future funding.

Oracle Coalfields (LON:ORCP) has slashed the predicted cost of its Thar coalfield and power station project in Pakistan, with mining now expected to start in 2014. A new implementation plan has cut the upfront costs to US$463 mln, almost half the original, largely through slashing the capex bill and reducing the planned output to 2.4 mln wet metric tonnes per year from 5 mln. That decision has cut US434 mln from the original budget, while the predicted costs of production have also fallen from US$42 per wet metric tonne to US$24 per wmt over the life of the mine. Oracle say the project is now targeted to return 20.5 per cent, based on the tariffs recently published by the Pakistan National Electricity Power Regulatory Authority for electricity produced from coal. Initial production of about 1 million wet tonnes per annum of lignite coal is expected to commence in 2014, with full production of 2.4 million wet tonnes per annum expected from 2015 onwards, Oracle said. The lignite requirement for a 300MW power station has been estimated at 2.2m wet tonnes per annum, which gives Oracle sufficient reserves to support a 300 MW power plant for 50 years. The principal method of mining for the first 8 years of operation (5 years of production) will be truck and shovel, Oracle said. In June, Oracle signed a Joint Development Agreement with the Karachi Electric Supply Company to develop a mine-mouth 300MW power plant, with the provision to increase its capacity to 1100MW. Shahrukh Khan, Oracle’s chief executive, said: “The reduced investment and production costs contained within the Implementation Plan significantly enhance the commercial viability of our project.” He added that the new implementation plan demonstrated that bringing the Thar project into production is not only attainable but also highly attractive in a commercial sense. “We are now much closer to unlocking the value of the Block VI in the Thar Coalfield,” he added. The focus now will be of securing the project finance required to bring the mine into production, he added.

a joint development agreement with Karachi Electric Supply to supply a new power station in Pakistan was a “hugely positive step”. Oracle’s 80 per cent owned subsidiary Sindh Carbon Energy Limited (SCEL) will provide coal and water to Karachi Electric (KESC) under a long-term deal. Initially, this will fuel a 300 MW coal-fired power plant (with potential to be increased to 1,100 MW) to be constructed by KESC adjacent to Oracle's planned coal mine in Block VI of the Thar Coalfield in Pakistan. The agreement supersedes a MoU signed between the two groups in 2009. Shahrukh Khan, Oracle’s chief executive, said: "This is a hugely positive step in the development of Oracle's project in the Sindh Province in Pakistan. "It follows shortly after the mining lease that the company was granted on 12 April 2012, and represents significant progress towards our goal of becoming a major coal producer in Pakistan.” "The agreement with KESC brings security in the form of a major purchaser for our product." SCEL can still supply other customers as long as they do not affect its obligations to KESC under the agreement. In phase 1 of Oracle’s mining area it had proven JORC coal reserves of 113 million wet tonnes from the JORC mineral resource of 529 million wet tonnes.

The product has been confirmed as suitable for power generation. The company is working on a bankable feasibility study as it seeks the funding required for the project and Citigroup Global Markets has been brought on board to find a “comprehensive funding solution”. The recruitment of an internationally recognised bank such as Citi is quite a feather in the cap for Oracle, which moved up to the AIM market in 2011. It underlines the significance of Thar as a potential supplier of cheap energy to the developing Pakistan economy. It contains lignite coal, which is brown in colour and has lower calorific value than the thermal coal that goes for export from places such as Indonesia. It’s the sort of coal that is found in abundance in Victoria, Australia and Germany.

Oracle Coalfields's (LON:ORCP) bid to develop Pakistan's first major coal mine was boosted today - as it was issued a mining lease. The long awaited lease was granted for a block on the Thar coalfield by the country's government and extends for 30 years and may be renewed for a further three decades. Earlier this year, the firm told investors that a feasibility study on the field in Sindh province underlined the project's “technical and economic viability” and showed a JORC-defined 529 million wet tonnes in the area to be mined. Oracle's chief executive Shahrukh Khan said: "This is a significant step for Oracle as we move towards becoming a major coal producer in Pakistan. "The company continues to achieve its objectives and today's news builds on our recent technical feasibility study which showed that, in phase 1 of our mining area, we have proven JORC coal reserves of 113 million wet tonnes from the JORC mineral resource of 529 million wet tonnes." The company boss added that the need for coal to fuel rising energy demand in Pakistan was well understood and said Oracle would now implement a pre-development programme before bringing the mine into production. The mining lease is for to 66.1 sq km of block VI of the coalfield, which lies 380 kilometres from Karachi and covers a total area of 9,100 sq km. Thar lies close to good infrastructure, with ongoing development of a road and power network in the region. In February this year, the company said total capital expenditure for an open-cast development was estimated at US$610 million, including US$224 million for mining equipment. This will allow the company to produce five million wet tonnes of lignite coal per year. However the plan initially at least is to mine around 1 million tonnes a year from 2013. Total cash costs were put at US$42.21 per wet tonne, and the life of the mine is estimated at 23 years.

Passenger transport group Stagecoach is to acquire the Wigan bus business and assets from First Manchester, part of FirstGroup. Stagecoach is paying £12m for a business which operates both commercial bus services and a small number of school contracts. In the 12 months to the end of March the business had revenues of £13.2m, made earnings before interest, tax, depreciation and amortisation of £2.2m and an operating profit of £1.5m. The acquisition will allow Stagecoach to expand its bus operations in the Greater Manchester region, where it already operates around 630 buses and employs 1,850 staff. The acquired business employs around 300 workers, and these will transfer to Stagecoach's Greater Manchester Buses East Limited business under Transfer of Undertakings (Protection of Employment) arrangements. Stagecoach expects the acquisition to be completed in early December 2012. Bus and train operator FirstGroup said the disposal was part of its strategy to reposition its UK bus division to focus on those areas that offer the greatest potential for growth. "The sale of our Wigan bus business marks continued progress in our programme of selected asset and business disposals as we review the scope and scale of our UK Bus portfolio and reposition it for the longer term," said Tim O'Toole, Chief Executive of FirstGroup. "With a clear focus we are working through a detailed plan to recover performance in our UK Bus division and equip the business to achieve sustainable growth and improved returns," O'Toole added.

The Times of India reported on October 15th that environmentalists have been concerned about the expansion of coal mines in the region and the effects it will have on forest dwellers. According to estimates in a report entitled 'Countering Coal', around 1.1m hectares of forest is under threat in the Central Indian region from just 13 coal fields. "If the Indian government implements its expansion programme then over 14,000 tribal people will lose their traditional homes and way of life in just one coal block of Mahan alone," the report says, according to the Times of India.

The lumberjacks are set to do all right after Essar Energy, the India-focused integrated energy company, gained permission to chop down trees close to its Mahan coal block, but forest dwellers are reportedly far from happy with the decision. Essar secured Stage One forest clearance from the Government of India's Ministry of Environment and Forests (MoEF) for its Mahan coal block. The Stage One clearance of Mahan coal block will speed up the supply of fuel to Essar Energy's nearby 1,200 megawatt Mahan phase I power project, which is due to be commissioned in the near future. The block was allocated in 2006 to Mahan Coal Ltd, a joint venture between Essar Energy and Hindalco. Naresh Nayyar, Chief Executive Officer of Essar Energy, said the Mahan I power plant will deliver "much needed electricity for the people of India." "This is a major step forward in our strategy of providing full fuel security for all of our power generation assets, thereby eliminating price and delivery risks. We also intend to set the best standards in protecting the rights and livelihoods of nearby villagers, restoring forest cover following mining work and conserving wildlife," Nayyar added.

The group has been beset by internal strife, with a series of clashes between major shareholder, the Bakrie Group - controlled by the Bakries, one of Indonesia's wealthiest and most influential families - and another of Bumi's original backers, financier Nat Rothschild. On October 16th Rothschild resigned from the board of Bumi, saying he had lost confidence in the management's ability to stand up for investors. That followed less than a week after the Bakrie Group attempted to solve the Gordian knot of cross-shareholdings at Bumi with an offer to swap its stake in the group for a stake of equivalent value in Bumi Resources, a subsidiary of Bumi. In addition, the Bakrie Group also made a conditional proposal on October 11th to buy back the remaining 18.9% shareholding in Bumi Tbk for cash before Christmas 2012, and made a conditional proposal to make a cash offer within the next six months for the company's 84.7% shareholding in PT Berau Coal Energy Tbk. Bizarrely, the independent non-executive directors of Bumi appointed Rothschild Group, the banking group founded by the Rothschild family, of which Nat Rothschild is a member, to evaluate the Bakrie proposals.

ber 2012 08:29 A A A Indonesian mining group Bumi took a break from board room squabbles to push out a third quarter report for its Berau Coal subsidiary, which showed coal production was up while sales were down. Berau Coal, which is 84.7% owned by Bumi, mined 5.5m tonnes of coal in the third quarter, up 4% from the 5.3m tonnes mined in the corresponding period of 2011 but unchanged from the preceding quarter. Third quarter sales were down 12% to 4.8m tonnes from 5.5m tonnes the year before, and were also down on the 5.3m tonnes sold in the second quarter of 2012. The free on board (FOB) average selling price during the third quarter of the current year eased to $71.30 a tonnes from $86.40 a tonne a year earlier and $75.20 a tonne in the preceding a quarter. At the same time, production costs per tonne rose. The third quarter production cost per tonne was $41.10, up from $38.70 a year earlier and $41.00 in the second quarter of 2012. The independent investigation commissioned by the board into alleged financial irregularities in Bumi's Indonesian operations, especially in relation to PT Bumi Resources, in which Bumi has a 29% interest, continues. Until such time as the findings of the investigation become apparent, the board will be holding fire on making any recommendations regarding changes in practice.

Asset sales forced upon company, analysts say At the end of September, the group's net debt was $10,974m and the gearing ratio was 25.3%. The average maturity of the group's gross borrowings remains at around 17 years. Debt is set to come down, however, as a result of an agreement with China National Offshore Oil Corporation (CNOOC) for the sale of certain interests in the Queensland Curtis LNG (QCLNG) project in Australia for $1.93bn and the sale of liquefied natural gas (LNG) from BG Group's global LNG portfolio. Broker Seymour Pierce however noted that the group currently has an asset divestment programme to reduce net debt exposure, and thinks the sudden announcement of the disposal "would suggest that the disposal of their Australian LNG interest was forced upon them rather than a strategic decision." "With the company also confirming that production in 2013 would now be in line with this year, tempering market expectations, investors are unaware as to how the company will maintain current earnings. This is compounded by the company's significant investment in gas related exploration with diminishing spot prices," Seymour Pierce's Sam Wahab wrote.

The production guidance shocker overshadowed third quarter figures which were released a day earlier than expected. Net income of $1,189m were in line with market expectations - Charles Stanley had predicted $1.12bn - and up from $1,021m in the third quarter of 2011. The Exploration & Production (E&P) division saw operating profit surge 13% to $1,331m from $1,183m the year before, ahead of Charles Stanley's forecast of about $1.25bn. This performance was surpassed by the Liquefied Natural Gas (LNG) division, which grew profit by 24% to $767m from $620m. The group said full year operating profit is likely to be at the top of the guidance range of $2.6bn to $2.8bn range. Both divisions were trumped by the Transmission & Distribution arm, which saw revenues rise 52% to $198m from $130m. Earnings per share (EPS) climbed 165 to 35 cents from 30.1 cents a year earlier. Revenue and other operating income rose 4% to $5,588m from $5,397m the year before. Cash generated by operations of $2,701m decreased by 1% as higher operating profits were offset by adverse working capital movements, primarily resulting from the timing of LNG cargoes

BG Group shocked the market on Tuesday morning by cutting back production guidance as a result of a number of delays to project start-ups. The group said production rose 5% year-on-year in the third quarter of 2012 as new projects ramped up, but various factors mean that the group now expects full-year production will be just 3% higher than in 2011, while 2013 output is not expected to show any growth at all. Delays, delays, delays Production levels have been hit by the previously announced shut-down of the non-operated Elgin/Franklin fields in the North Sea and the group's strategic decision to scale back drilling in the USA due to low natural gas prices. On top of that, the deferral of the start-up of the Jasmine field in the North Sea to 2013 will put a lid on production growth, while BG has also adjusted its 2013 plans to accommodate an extended sub-sea tie-in schedule for Brazil's Sapinhoá and Lula NE wells. "We have also reflected lower production in Egypt where the Phase 7 compression project has been less effective than expected in arresting reservoir decline. In aggregate, these factors are expected to result in 2013 volumes being broadly in line with 2012," revealed Sir Fank Chapman, Chief Executive of BG

Technical analysis: Stock looks to attack resistance Technical analysts at Digital Look have taken a look at the Spanish stock, which they say has a bullish outlook since the breakout of the 200-day moving average in September. "Recent declines have come to an end before reaching the support level at €5.80, the last time the price has met with the 200-day moving average. Thursday's early gains lead us to consider an attack at the top part of the range in which the stock has been trading since September. £The breakout of €6.64 would give us a theoretical primary target of €7.60, which we get by adding the width of the range to €6.64. Such a move would also lead us to consider a long-term trend reversal," analysts explain. "High accumulation levels give consistency to the current bullish trend. This bullish bias will remain in play as long as the stock trades above €5.81, the October low. We advise to wait for the breakout before taking any positions."

Spanish banking giant BBVA reported quarterly earnings that fell short of the consensus estimate as it continues to account for losses on real-estate assets. BBVA generated a third-quarter profit of €146m, short of the average €186.4m estimate in a Bloomberg survey of analysts. The lender reported nine-month net earnings of €1.656bn, a 47.3% drop from the year-ago period, after including two-thirds of provisioning charges needed to comply with government requirements.Operating income, which determines the bank's ability to set aside provisions, was €9bn for the first nine months, up 16.1% year-on-year. Net interest income rose by 16% to €11.22bn while the gross margin rose 13.6% to €17.103bn. Bad loans as a percentage of total lending was 4.8% in September, up from 4% in June, after incorporating Unnim to the group's results. The coverage rate rose to 69%. BBVA reported a core capital rate of 10.8%, unchanged from June, according to the current Basel regulation. The stress test conducted by consultancy group Oliver Wyman over the summer had concluded that BBVA would have a capital buffer of more than €11bn in a worst-case scenario.