Royal Dutch Shell Plc
Based in the Netherlands, the Royal Dutch Shell Plc is engaged in the exploration and production of crude oil and natural gas in conventional oil fields as well as in shale. The company also acts as a parent company of Shell group, which operates in energy and petrochemical sectors in around 70 countries globally. The company has four segments, namely Integrated Gas (I.G.), Upstream, Downstream and corporate. The I.G. division is involved in liquefaction and transportation of gas and the conversion of Natural Gas to liquids which can be further converted into fuels and other energy-generating products. The upstream segment majorly engages in activities such as exploration and extraction of crude oil natural gas liquids and the marketing of these products. The downstream segment majorly involves refineries and the manufacturing of various chemicals as well as oil products. The company is a global leader in Energy Marketing and Trading business with significant operations in Europe, North and South America and the Asia Pacific. Additionally, the company has now also started serving residential customers by providing alternate energy sources which are sustainable in nature with a recent residential alternative energy launch in the United Kingdom. The company is moving towards the production of cleaner energy to achieve Net zero emissions.
In the wake of the drone attacks on Saudi Aramco’s operations in Kingdom of Saudi Arabia, the oil prices have surged globally, to more than $71 per barrel, which is the highest in last six months, due to Saudi Aramco cutting its oil supply in half. This has only meant that Shell’s trading activity is likely to rise in the coming months and oil is expected to be sold at a higher price than before. Brent crude, which is a price benchmark for Atlantic Basin crude oils, jumped by 10 per cent. Given that the Shell is a major competitor of Saudi Aramco, it is expected that in the coming months, until the Saudi Oil Supply is back to it previous quantities, Shell’s business is only going to get better in wake of demand rise.
RDSA Financial Performance
On first August 2019, the company announced its interim Quarter 2 as well as first-half results for the period ended 30th June 2019. The company reported total revenue and other income of $177.49 billion in H1 2019 as compared to $190.3 billion in H1 2018, which showed a decline of 6.73 per cent year on year. The company reported an Income before Tax of $14.32 billion in H1 2019, which is a decrease of 20.31 per cent year on year from the H1 2018 Income before tax of $17.97 billion. The Basic Earnings per share (BEPS) was down 22.91 per cent year on year from $1.44 per share in H1 2018 to $ 1.11 per share in 2019 indicating a significant downfall in the financial performance for the first half of the year. The cash position as on 30th June 2019 was $18.47 billion while the company had a combined debt of $92.64 billion as on the 30th June 2019.
Principal Risks and Challenges – Fluctuation in global prices of Crude Oil, Natural Gas, Oil Products and Chemicals remains the leading risk factors for the company's operations as these fluctuating prices affect the demand for the product which further affects the company's trading activity. Another significant risk factor involves the geopolitical situations as these diplomatic unrests can have a massive impact on the price and demand and supply of the product as currently is the case with one of Shell's competitors- Saudi Aramco. Another significant risk factor is the change in regulatory conditions which might affect the operational fluency of the company's projects.
RDSA Share Performance
On 16th September 2019, at 09:16 AM GMT, while writing, RDSA traded at GBX 2347.5 per share; an upside of 2.85 per cent or GBX 65 in comparison with the previous day’s last price of GBX 2282.5 per share. Currently, Royal Dutch Shell Plc stock is trading 6.25 per cent on top of its 52-week low of GBX 2209.5, as of Jan 28, 2019. The company’s Market Capitalisation was around GBP 182,485 million.
2.78 million Stocks of the company have been traded at the time of trading. The average trading volume per day for last one year has been of 5.39 million shares. The stock has declined 4.94 per cent in the previous year from the price of GBX 2473 per share.
The beta of the stock was at 0.8877, showing that the share price movement is less volatile compared to the benchmark market index.
BP Plc is an integrated oil and gas company that is involved in the extraction and exploration of oil and gas and in the manufacturing of oil products, fuels and lubricants. The company owns a stake in OJSC Oil Company Rosneft (Rosneft), another integrated oil and gas company. The company has four major business segments which are - Upstream, Downstream, Rosneft and Corporate. The upstream segment is involved in the oil and natural gas exploration, field development and production as well some midstream activities such as transportation, storage and processing and refining. The Downstream division has international manufacturing, processing and marketing operations. The Rosneft segment has a base of hydrocarbons both onshore and offshore. The corporate function is involved in the business-related activities like shipping, treasury and corporate operations, and also includes biofuels business segment and the wind energy business segment. The company is a global leader in Fuels, Energy provision, lubricants and petrochemical products. The company operates in 78 countries around the world with presence in both North and South America, Europe, Australasia and the Asia Pacific with approximately 18,700 retail sites all over the world.
Being the top company in the oil and gas sector, BP also gets deeply affected by the geo-political tensions and the price rise of the crude oil in the global price market. It is anticipated that in the coming six weeks, BP's trading activities are expected to rise, given the demand of crude oil globally and Saudi Aramco's inability to produce enough supply after an attack in the Kingdom of Saudi Arabia.
BP Financial Performance
The company reported its Q2 2019 results ended 30 June 2019 on 30 July 2019. In Q2 2019, the company reported year on year flatlined underlying replacement cost profit at $2.8 billion. Operating cash flow was at $8.2 billion for Q2 2019, excluding the oil spill payments for the Gulf of Mexico and including a $1.5-billion release of working capital. Gulf of Mexico oil spill payments of $1.4 billion on an after-tax basis in the second quarter were majorly the planned yearly payments. The company also announced a dividend of GBX 10.25 per share for the reported quarter. In terms of segmental performances, the upstream and downstream performance was robust with oil and gas production for Q2 averaging 3.8 million barrels/day, which was a 4 per cent increase year on year. In the Downstream segment, quarter on quarter rise in lubricants and fuels marketing and transportation activities was more than what was expected.
Risks and Challenges – The company’s performance is primarily impacted by fluctuation in the price of crude oil, which has an impact of demand and supply in the international markets as well as macroeconomic factors such as fluctuations in the foreign exchange rate. Any decline in oil, gas or product prices could have an adverse effect on revenue, margins, profitability, cash flows and the valuation of assets. Another risk factor for the company is inaccessible resources because one of the most significant business segments for the company is the upstream business segment which entirely depends on the availability and accessibility of natural resources for extraction.
BP Share Performance
On 16th September 2019, at 12:20 PM GMT, while writing, BP shares traded at GBX 527.22 per share; up by 4.52 per cent or GBX 22.82 in comparison with the previous day’s last price of GBX 504.4 per share. Currently, BP Plc stock is trading 9.53 per cent above its 52-week low of GBX 481.35, as of December 27, 2018. The company’s Market Capitalisation is around GBP 102,693 million.
22.47 million Stocks of the company have been traded till the time of writing. The average trading volume per day for last one year has been of 29.78 million stocks. The stock has declined 4.21 per cent in the previous year from the price of GBX 548.7 per share.
The beta of the stock was at 1.4052, showing that the share price movement is more volatile compared to the benchmark market index.
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