As per media report, the Permian Basin head of Royal Dutch Shell Plc (LON: RDSA) stated that the company is planning to spend billions of dollars on drilling project for the shale gas. It boosted production to 0.25 million barrels per day at the top U.S. shale field in December 2019.
At the Argus Americas Crude Summit in Houston, the vice president of Permian assets for Royal Dutch Shell Plc, Amir Gerges, stated that the company is ready to spend nearly $3 billion every year for the coming five years on drilling projects for shale gas. He further said that the company continues to increase production from its core reserve area. However, in the year 2019, the production of the Permian basin increased by over 0.1 million barrels per day.
The company and its competitors such as BP, Exxon Mobil and Chevron are splurging money to the tune of billions of dollars in New Mexico and Permian Basin of Texas. The company considers shale as a short-term asset that augments projects like deep-water wells which require long periods of gestation.
Amir Gerges commented that the Permian basin has 30 years of high potential drilling resource and will continue to be the core of oil growth of the United States. But the oil and gas industry is subjected to many threats in the region, ranging from excessive burning of natural gas to insufficient infrastructure and present shareholders sentiments.
Previously, the company revealed that it might be looking for a way to increase its presence in the Permian basin. Still, during last week’s earnings call, Ben van Beurden, who is Chief Executive Officer of the company, indicated that the time for an acquisition is not ripe as of now.
Meanwhile, all sizes of gas and oil companies have been under pressure to generate free cash flow and return it to shareholders via dividends and share repurchases. The industry is also under stress to lower emissions, mainly from flaring up of huge volume of gases, i.e. deliberately burning gas resulting from a by-product of oil.
As per the media report, Amir Gerges commented that the region requires extra infrastructure, for example, pipelines to transport natural gas. But it is far more crucial to have an incentivized reduction in burning.
RDSA - Stock Price Performance
On 06th February 2020, at around 08:39 AM (GMT), by the time of writing this report, the stock of Royal Dutch Shell Plc was trading at a price of GBX 2,031.0 per share on the London Stock Exchange, an increase in the value of around 0.32 per cent or GBX 6.50 per share, as opposed to the closing price of the stock on the previous trading day, which has been reported to be at GBX 2,024.50 per share. At the time of writing, the market capitalisation of Royal Dutch Shell Plc was £83.55 billion with regards to the current market price of the stock.
The share price of Royal Dutch Shell Plc recorded at GBX 2,811.38 as on 07th May 2019 was its 1-year peak price, whereas the share price recorded at GBX 1,961.60 as on 03rd February 2020 was the 1-year low share price. The current share price was lower by 27.76 per cent from the 1-year high price; whereas the current share price was higher by 3.54 per cent from the 1-year low price.
The beta of the stock has been reported at a value of 0.97, representing the fact that the movement of the share price of the company, is almost in line with the movement in the comparative benchmark index.
The free float and outstanding share of Royal Dutch Shell Plc was reported at 7.85 billion and 7.86 billion, respectively.
RDSA – Interim Dividend
On 30th January 2020, the company announced its interim dividend of US$0.47 per A share and B share for the fourth quarter of the year 2019, equal to the US dollar dividend in the year 2018 for the corresponding quarter. The ex-dividend date will be on 13th February 2020, and the record date will be on 14th February 2020.
The A-share cash dividend will be transmitted in euros, the default currency. But A-share shareholder can choose to accept dividends in Pounds Sterling or US dollar.
However, The B-share cash dividends will be transmitted in Pound Sterling, the default currency. But B-share shareholder can choose to accept dividends in Euro or US dollar.
The board of the company anticipated that the dividend would be US$0.47 per share for the first quarter of the year 2020. However, the interim dividend for the first quarter of the year 2020 is expected to be declared on 30th April 2020.
RDSA – Financial Highlights
On 30th January 2020, the company announced its fourth-quarter and full year results for the period ending 31st December 2019.
The company’s total revenue and other income stood at $352.1 billion in the year 2019 as compared to the $396.6 billion in the year 2018, a decrease of 11.2 per cent.
In contrast, the company’s total revenue and other income stood at $85.1 billion for the fourth quarter 2019 as compared to the $104.6 billion for the fourth quarter 2018, a decrease of 18.64 per cent.
The production and manufacturing expenses stood at $26.4 billion in the year 2019 as compared to the $26.9 billion in the year 2018.
In contrast, the company’s production and manufacturing expenses stood at $7.2 billion for the fourth quarter of 2019 as compared to the $6.8 billion for the fourth quarter of 2018.
The exploration expenses stood at $2.35 billion in the year 2019 as compared to the $1.34 billion in the year 2018.
In contrast, the company’s exploration expenses stood at $965 million for the fourth quarter of 2019 as compared to the $545 million for the fourth quarter of 2018.
The Income/(loss) before taxation stood at $25.5 billion in the year 2019 as compared to the $35.6 billion in the year 2018, a decrease of 28.3 per cent.
In contrast, the company’s Income/(loss) before taxation stood at $2.8 billion for the fourth quarter 2019 as compared to the $7.9 billion for the fourth quarter 2018, a decrease of 64.6 per cent.
The Income/(loss) for the period stood at $16.4 billion in the year 2019 as compared to the $23.9 billion in the year 2018, a decrease of 31.4 per cent.
In contrast, the company’s Income/(loss) before taxation stood at $1.09 billion for the fourth quarter 2019 as compared to the $5.6 billion for the fourth quarter 2018, a massive decrease of 80.4 per cent.
The basic earnings per share decreased to $1.97 in the year 2019 as compared to $2.82 in the year 2018. The diluted earnings per share fell to $1.95 in the year 2019 as compared to the $2.80 in the year 2018.
(Sources: Company Reports)
Royal Dutch Shell Plc
Royal Dutch Shell Plc (LON: RDSA) is an international group of petrochemical and energy companies with around eighty-six thousand strong workforce in over seventy countries. The company uses innovative technologies and takes an advanced approach to support building of a future with sustainable energy feed.
It aims to meet up the increasing requirement for additional as well as cleaner energy solutions which are environmentally, economically and socially viable.
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