RDS Sets 2014 Production Target

JEAN-CHARLES LACOSTE, Cheuvreux (10/07/2010)
"Shell confirmed its guidance of production of 3.5mb/d I 2012, which we back with our bottom-up project-by-project analysis. It also confirmed that its major projects in Qatar, Pearl GTL and Qatargas 4 are on track to be put onstream around the end of the year. The growth rate by 2012 is one of the highest among IOCs. For the first time Shell announced, during the field trip, that it targets a worldwide production of 3.7 mboe/d in 2014. The company also confirmed its target set at the strategy presentation in March to increase its operating CF by 50% between 2009 and 2012 at US$60/b, and by more than 80% at US$80/b.

Shell will deliver the highest production growth among the IOCs with a CAGR of 3.6% over 2009-2012. In the downstream, the target is to reduce the refining capacity by 15% over 2009–2012. Operating CF is expected to increase 50% by 2012 with oil at US$60/b and more than 80% at US$80/b. Assuming capex of US$26 billion (B) and a flat dividend of US$10B, Shell would be CF neutral at USD60/b and would have a US$6bn–$8B surplus CF at US$80/b. Dividends are safe and the yield of 6.3% is attractive. Our preferred stock within oil majors."

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