Oil
Shell Profit Misses Analyst Estimates
… as Global Output Drops
LONDON – Royal Dutch Shell Plc (RDSA), Europe’s biggest oil company, reported third-quarter earnings that missed analyst estimates as profits at refineries plunged, disruption in Nigeria cut output and spending increased.
Profit excluding one-time items and inventory changes fell 32 percent to $4.5 billion from $6.6 billion a year earlier, The Hague-based Shell said in a statement. That missed the $5.3 billion average estimate of 11 analysts surveyed by Bloomberg. Spending on projects and acquisitions will reach $45 billion this year, the company said, $5 billion more than expected.
Enlarge image Shell Gas Station
Royal Dutch Shell Plc has forecast net capital expenditure of about $40 billion this year and plans to invest as much as $130 billion in 2012-2015. Photographer: Andrey Rudakov/Bloomberg
Oil and gas production dropped 2 percent worldwide because of disruptions in Nigeria and margins at oil refineries fell in the third quarter because of overcapacity in Europe, where fuel demand is falling. Chief Executive Officer Peter Voser, who steps down at the end of the year, said Shell would cut net spending next year by increasing the pace of asset sales.
“We are facing headwinds from weak industry refining margins, and the security situation is Nigeria,” Voser said in today’s statement. “Shell has a strong project flow in place for 2014 and beyond.”
Shell shares fell as much as 5.5 percent to 2,065 pence in London, the most intraday since August. They traded at 2,078.5 pence at 11:15 a.m. local time.
Earnings from refining and marketing almost halved to $892 million in the third quarter from a year ago, Shell said. The company pumped 2.931 million barrels of oil equivalent a day in the quarter, about 2 percent lower than a year earlier, amid production interruptions in Nigeria.
Net income fell 35 percent to $4.7 billion.
‘Disappointing Results’
“These were very disappointing results, made all the more so by guidance on capex,” analysts at Deutsche Bank AG said in a note to clients. Maintenance work in Nigeria, Qatar and the U.K. mean “earnings are likely to remain challenged in the coming quarter.”
Shell’s chief financial officer, Simon Henry, defended the company’s record on investment. This year’s total includes about $10 billion in acquisition including LNG assets from Repsol and and assets in Brazil, while divestments in Nigeria, the U.S. and U.K. have been deferred until next year, he said.
“It would be easy to get to cheap headlines and the cheap boost to the stock price by cutting investment,” Henry said on a phone call with reporters. “It’s in nobody’s long-term interest. We take criticism for the time being, so be it. We can afford to invest.”
Exxon Mobil
France’s Total SA today said third-quarter earnings decreased 19 percent to 2.7 billion euros ($3.7 billion) on lower refining margins. BG Group Plc said adjusted profit slipped 4 percent to $1.1 billion on lower production.
Exxon Mobil Corp., the world’s largest oil company, will report earnings later today.
Shell, which operates almost half of Nigeria’s production, has shut the Trans Niger oil pipeline five times since July because of fuel theft. The West African nation has been losing $100 million a month because of oil-pipeline sabotage and shutdowns, Chief Financial Officer Simon Henry estimated in May.
Security Situation
Profits were reduced by $300 million by “the deteriorated security situation onshore Nigeria and a blockade of Nigeria LNG,” it said today. Shell also took a $176 million net charge in the quarter, “predominantly related to various offshore properties in North America.”
Shell’s refining head, Ben van Beurden, will succeed Voser next year. Among the large-scale projects he will take on is the Libra field off Brazil, won by the company and its partners this month. Shell has forecast net capital expenditure of about $40 billion this year and plans to invest as much as $130 billion in 2012-2015.
Van Beurden will also seek to restore profit at Shell’s North American operations. Shell started selling U.S. shale assets after booking a $2.1 billion impairment this year. Shell in August scrapped a 4 million-barrel-a-day target for total output in 2017.
Shell took over the Coulomb North field project, which is pumping about 10,000 barrels of oil equivalent a day in the Gulf of Mexico, the company said today. It sold its interest in the downstream business in Ghana.
Shell will proceed with the Carmon Creek project in Alberta, Canada, the company said in a separate statement. The project is expected to produce as much as 80,000 barrels a day.
– BLOOMBERG
In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.
The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.
The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.
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These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.
The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.
This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.
These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.
The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.
By Yemie Adeoye
NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.
The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.
“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”
The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.
“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.
Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.
As part of the administration’s push to improve Ease of Doing Business (EoDB), Nigeria’s Vice President Kashim Shettima has expressed support for ExxonMobil’s plan to invest $10 billion in the country’s deep-water oil sector.
Speaking on Wednesday, September 25, 2024, during a meeting with ExxonMobil executives at the 79th United Nations General Assembly (UNGA) in New York, Shettima called the investment “a clear testament to the administration’s economic reforms and investor-friendly policies.”
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This announcement follows news that international maritime company DP World intends to develop a multibillion-dollar port project in Nigeria.
Stanley Nkwocha, Senior Special Assistant to the President on Media and Communications, shared the development in a statement on Wednesday. He quoted Shettima as saying: “ExxonMobil’s potential investment aligns with the vision of President Bola Ahmed Tinubu’s administration for a more investment-friendly Nigeria.
We are committed to fostering an environment that supports such transformative projects.”Shettima also discussed the administration’s broader efforts to improve the ease of doing business, highlighting the “Renewed Hope Agenda,” which aims to simplify bureaucratic processes, enhance transparency, and offer fiscal incentives to attract global investors.
“Our administration has taken bold steps to unify the exchange rate, remove fuel subsidies, and implement tax reforms. These measures, though challenging in the short term, are intended to create a stable and predictable business environment in the long term,” he added.
On the oil and gas sector, Shettima mentioned that the government is revising the fiscal framework for deep-water operations to attract investment while ensuring fair returns for the Nigerian people.
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