Bloomberg: Shell to Cut Americas Spending by 20%, Continue Refinery Sales By Eduard Gismatullin - Mar 13, 2014 Royal Dutch Shell Plc (RDSA), Europe’s largest oil producer, plans to reduce spending in the Americas by 20 percent to focus on more profitable projects. “Upstream Americas profitability has been impacted by losses in resources plays such as shales,” Shell said today in a statement before Chief Executive Officer Ben van Beurden hosts his first strategy day in London. “The company intends to drive hard choices on capital allocation for selective growth, and divestment of non-strategic positions.” Van Beurden has pledged to reduce spending this year and accelerate refinery and other asset sales after The Hague-based Shell issued its first profit warning in a decade. The CEO also has scrapped targets for cash flow, delayed drilling off Alaska and promised to restructure shale operations in North America. Unprofitable shale investments contributed to a 48 percent slump in profit in the fourth quarter, the Anglo-Dutch company said Jan. 30. “We highlight the consistent decline in profitability-per-barrel in Upstream Americas as both concern and opportunity for material upside potential,” Peter Hutton, an analyst at RBC Capital Markets, wrote in an e-mailed report yesterday. Shell said performance from refining and fuel marketing is weaker than that from businesses such as chemicals, lubricants and biofuels. It intends to separate the portfolio into distinctive units. Divestment Program Van Beurden plans to dispose of about $15 billion of assets through 2015. It has agreed to sell holdings valued at more than $4.5 billion in Australia, Brazil and elsewhere, and is seeking buyers for stakes in oil and gas fields as well as in pipeline and fuel-marketing assets from the U.S. to Nigeria. It may also exit its $6.3 billion investment in Woodside Petroleum Ltd. The asset-sales target is “cautious” and is likely to be raised, Investec Bank Plc wrote yesterday in an e-mailed report. That said, Shell may make further “bolt-on acquisitions,” the bank said. Van Beurden and Chief Financial Officer Simon Henry indicated in January that first-quarter earnings will be curbed by lower production following the end of a project in the United Arab Emirates and caps on Dutch gas output. To contact the reporter on this story: Eduard Gismatullin in London at [email protected] To contact the editors responsible for this story: Will Kennedy at [email protected] Amanda Jordan ®2014 BLOOMBERG L.P. ALL RIGHTS RESERVED.
Posted on: Thu, 13 Mar 2014 14:19:46 +0000
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