Energy equity research

Explore the most viewed and latest equity research and media content for companies within the Energy sector. Stocks include integrated oil & gas majors, providers of oil services, exploration & production companies (E&Ps), and renewable & alternative Energy providers.

Energy equity research

Explore the most viewed and latest equity research and media content for companies within the Energy sector. Stocks include integrated oil & gas majors, providers of oil services, exploration & production companies (E&Ps), and renewable & alternative Energy providers.

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E&P projects ramp-up and disposals to support 2017

  • 20 Feb 17

After the publication of the annual results, we have updated our model and highlight the key points. Q4 16 key highlights As a reminder, the company reported results of $1.8bn, $0.5bn below expectations for Q4 16. One-offs were $763m for the quarter mainly driven by the integrated gas division related to the weakening Australian dollar and the deferred tax position in Malaysia. By division: 1) Integrated gas’s clean earnings came in at $907m, down 27% yoy. The decrease is driven by the step-up in depreciation resulting from the BG acquisition and the increase associated with the start-up of Gorgon. Other items related to the BG Group consolidation impacted the division. The impact of higher oil prices was more than offset by the decline in LNG prices. Q4 16 production was 908kbpd, up from 633kbpd a year ago thanks to the integration of BG. For the full year, the integrated gas division reported $3.7bn of clean earnings, -27% compared to the previous year. 2) The upstream division showed a small profit of $54m, compared to a loss of $1bn a year earlier. Higher oil prices and increased volumes thanks to the BG integration supported the results driven by an improved operational performance. For the full year, the upstream division reported a loss of $2.7bn compared to a loss of $2.25bn in 2015. 3) Downstream’s earnings came in 12% lower yoy to $1.34bn, impacted by lower trading and refining margin and higher taxation. The results are split between oil products ($823m, down 39% yoy) and chemicals ($516m, up 184%). In oil products, refining trading came in at $77m, down from $771m a year ago. Marketing came in at $746m compared to $631m a year ago on lower operating expenses. Chemicals came in higher on stronger industry conditions driven by the tight supply in Asia and an improved operating performance. For the full year, the results came in at $7.2bn, down 26% yoy. Cash flow position Cash flow from operating activities for Q4 16 was $9.2bn, capex $6.9bn, the dividend $2.3bn, and disposals of $2.7bn which helped to reduce debt to $73bn. Gearing at the end of 2016 was 28%. The dividend was $0.47. The company is close to selling assets for $5bn, which is good news as the group still has to sell $20bn to remain on track with its deleveraging. Capex totalled $26.9bn for the full year 2016, lower than expected and it plans to reduce this in 2017 to $25bn, in the low end of the 2017-20 range of $25-$30bn. The CEO highlighted: “Production and LNG volumes included delivery from new projects, with the ramp-up continuing in 2017 and 2018. Meanwhile the company operates at an underlying cost level that is $10bn lower than Shell’s and BG’s combined only 24 months ago. Shell is gaining momentum on divestments, with some $15bn completed in 2016, announced, or in progress, and we are on track to complete our overall $30bn divestment programme as planned. Strategy is starting to pay off and in 2017 we will be investing around $25bn in high quality, resilient projects. I’m confident 2017 will be another year of progress for Shell to become a world-class investment”

 

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