Shell on a Selling Spree to Survive

Billions in assets are being divested to keep the iconic oil company afloat. They are not the only one.

Wayne Gerdes – CleanMPG – July 24, 2017

Refueling a 2017 Toyota Corolla LE Eco at my local Shell here in Carlsbad, California last week.​

Shell has survived like the rest of the majors through the oil price peak and its high of $145.18 on July 14th, 2008 to the Great Recession low of just $33.98 in February of 2009.

Oil price fluctuations have not been steady between that eye-opening high setting the table for the Great Recession. Another high of $113.93 occurred on April 29th, 2011 to the most recent low on Feb. 11th, 2016 when oil hit just $26.21/barrel.

Through 2017 prices have been a little more stable with a range of $53.99 during the first week of the year to a June low of $42.53, and of course this evenings close of $46.63.

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When your major product has price swings like this, the financial pressures must be overwhelming! A quick look through the financials show the company has not covered its dividend that was reinstated after the Q1 of 2014.

Some of the financial divestments announced over the previous 18-months and followed through in 2017 YTD include the following:

Jan 22, 2017 - Shell to sell stake in SADAF chemicals joint venture in Saudi Arabia to SABIC

Shell and SABIC have signed an agreement whereby SABIC will acquire Shell’s 50% share in the petrochemicals SADAF joint venture, located in Jubail, Kingdom of Saudi Arabia for $820 million. The SADAF joint venture encompasses six world-scale petrochemical plants with a total output of more than 4 million metric tons per year. This announcement marks an early termination of the joint venture agreement which was due to expire in 2020.

Jan 31, 2017 - Shell signs agreement to sell its stake in Thailand’s Bongkot field

Shell has reached an agreement with KUFPEC Thailand Holdings Pte Limited, a subsidiary of Kuwait Foreign Petroleum Exploration Company (KUFPEC), for the sale of subsidiary companies Shell Integrated Gas Thailand Pte Limited and Thai Energy Co Limited, which together hold a 22.222% equity stake held in the Bongkot field, and adjoining acreage offshore Thailand consisting of Blocks 15, 16 and 17 and block G12/48, for USD 900 million.

Jan 31, 2017 - Shell to sell package of UK North Sea assets to Chrysaor for up to $3.8bn.

Shell has agreed to sell a package of UK North Sea assets to Chrysaor for a total of up to $3.8bn, including an initial consideration of $3.0bn and a payment of up to $600m between 2018-2021 subject to commodity price, with potential further payments of up to $180m for future discoveries.

Mar 6, 2017 - Saudi Aramco and Shell achieve significant milestone toward separation of Motiva assets

Saudi Aramco and Shell announce the signing of binding definitive agreements on the separation of assets, liabilities and businesses of Motiva Enterprises LLC.

The signing of binding definitive agreements between SOPC Holdings East LLC (a U.S. downstream subsidiary of Shell) and Saudi Refining Inc. ("SRI") (a wholly owned subsidiary of Saudi Arabian Oil Company (“Saudi Aramco”)) on the separation of assets, liabilities and businesses of Motiva Enterprises LLC (“Motiva”), a 50/50 refining and marketing joint venture.

A balancing payment of $2.2 billion has been agreed between the parties, subject to adjustments including for working capital. This value will be satisfied by a combination of SRI assuming more than its 50% share of Motiva’s net debt on completion and a cash payment for the balance. As at 31 December 2016, Motiva’s total net debt was $3.2 billion, of which Shell will assume $0.1 billion, resulting in a deduction to the cash portion of the balancing payment of $1.5 billion.

Mar 9, 2017 - Shell divests oil sands interests in Canada for net consideration of $7.25 billion

Royal Dutch Shell plc today announces the signing of two agreements by Shell Canada Energy, Shell Canada Limited and Shell Canada Resources (“Shell”) — which are detailed in this announcement — that will see Shell sell all of its in-situ and undeveloped oil sands interests in Canada and reduce its share in the Athabasca Oil Sands Project (AOSP) from 60 percent to 10 percent. Shell will remain as operator of AOSP’s Scotford upgrader and Quest carbon capture and storage (CCS) project.

Mar 24, 2017 - Shell divests Gabon onshore interests

Royal Dutch Shell plc (Shell), through its affiliates, has reached an agreement with Assala Energy Holdings Ltd. a portfolio company of The Carlyle Group (CG: NASDAQ), to sell 100 percent of its Gabon onshore interests for $587 million.

Apr 5, 2017 - Shell announces the conditional sale of its LPG business in Hong Kong and Macau to DCC Energy

Shell has announced the conditional sale of its Liquefied Petroleum Gas (LPG) business in Hong Kong and Macau to DCC Energy for a total enterprise value of US$ 150.3 million (approximately HK$ 1,165 million).

Apr 26, 2017 - Shell completes sale of Vivo Energy stake to Vitol Africa BV

Shell has completed the sale of its 20% interest in Vivo Energy Holding B.V. to Vitol Africa B.V. for a total amount of US$250 million.

May 1, 2017 - Shell announces the completion of the transaction to separate Motiva assets

Royal Dutch Shell plc ("Shell") announces today the completion of the transaction for the separation of assets, liabilities and businesses of Motiva Enterprises LLC (“Motiva”).

May 31, 2017 - Shell completes sale of its aviation business in Australia

Following regulatory approval, Shell has completed the sale of its Australian aviation business (“Shell Aviation Australia Pty Ltd”) to Viva Energy Australia Pty Ltd (“Viva Energy”) for a total transaction value of approximately US$ 250 million, including working capital. This sale was announced on 19 December 2016.

May 31, 2017 - Shell completes divestment of oil sands interests in Canada

Royal Dutch Shell plc today announces the completion of two previously announced agreements by Shell Canada Energy, Shell Canada Limited and Shell Canada Resources (“Shell”) that will see Shell sell all its in-situ and undeveloped oil sands interests in Canada and reduce its share in the Athabasca Oil Sands Project (AOSP) from 60% to 10%.

Jul 12, 2017 - Shell to divest Upstream interests in Ireland for up to $1.23 billion

Royal Dutch Shell plc (Shell), through its affiliate Shell Overseas Holdings Limited, has reached an agreement with CPP Investment Board Europe S.A.R.L. a wholly owned subsidiary of Canada Pension Plan Investment Board ("CPPIB"), to sell its shares in Shell E&P Ireland Limited, that holds 45% interest in the Corrib gas venture for up to $1.23* billion (€1.08 billion).

From Shell's 2016 Investors Handbook, the grim outlook explains it better than anyone I know.

Ben van Beurden is the CEO of Royal Dutch Shell plc. and I can only imagine the stress that he is under while watching Crude Futures as an indication of the company’s future, completely out of his control.

Royal Dutch Shell is one of many major Oil producers around the world experiencing extreme financial distress that low oil prices create. Which makes you wonder, are the Saudi’s possibly setting up asset purchases via fire sale for the huge payback when oil prices rise again? After all, oil today is the same price that it was in early 1974 and that price is not inflation adjusted! Could any of us live on a raw wage or just $0.20 on the dollar of what we earn today when inflation adjusted back to 1974? $45/barrel oil does not support a healthy U.S. or global energy sector let alone a electrified transportation future. On the flip side, more stable prices in the $60 to $80 per barrel range may not bode well for the Big 3s domestic production and sales of full size Pickups and SUVs that are the only segments that earn money for those companies. We are in a precarious time for any number of reasons including global geo-political threats that could arise with either higher or lower prices. Think about that one for a moment.

Royal Dutch Shell Stock 5-Year Stock Price


Definitely a recovery off the Jan 2016 lows and holding above the 200-Day Moving Avg. over the past 9-months appears positive for investors going forward.​

 

Hey I'm doing my part, I use Shell gasoline exclusively since realizing that I get my best fuel mileage running it in my cars.

 

The highest octane shell (91?) is ethanol free? Frustrating to have to "shell" out so much though...

 

I'd like to find some straight gas: I'm wondering if we DID, filled up in a small town up the BC coast, regular at Chevron, and ended up with an easy 10% jump in mpg for that tank. Most of the tank was back in town. Filled up again in town, Chevron regular again, and back to normal.

There for sure is Chevron 94 octane here, that has a sticker on the pump saying ethanol free.

 

Your truck can tell?

 

This is "probably" an image I spawned, a while back on PriusChat. The state of affairs in BC, Canada. A Chevron station btw. I believe Shell is similar, with highest octane being ethanol-free:

 

Hi Mendel:

Shell V-Power NiTRO+ across all of Canada is Ethanol free. Unfortunately the 87 and 89 are ethanol laced.

Wayne

 

I wish it was also Ethanol free here in the states.