Shell gearing up for world of “lower forever” oil prices
Royal Dutch Shell CEO Ben van Beurden says his company is gearing up for “lower forever” oil prices after his company tripled their profits in the second quarter.
The large multi-national oil company increased its cash flow to $12.2 billion and reduced its debt by selling assets and cutting costs.
Van Beurden said that with oil prices remaining around $50/barrel, and only a modest recovery forecast by the end of the decade, Shell will continue tackle costs. He added Shell was “getting fit” to be profitable at $40/barrel oil.
“The external price environment and energy sector developments mean we will remain very disciplined.”
The company’s approach has made it one of three top picks of global oil analysts, along with Chevron and Total, according to Reuters data.
Shell’s “performance is beginning to show the underlying potential of Shell’s ability to generate operating cash flows in the current oil price environment,” Brendan Warn, analyst at BMO Capital Markets, told Reuters. BMO has an “outperform” recommendation on Shell.
In their Q2 reports, Total and Statoil also beat analysts expectations.
ConocoPhillips cuts capex after Q2 loss
On Thursday, ConocoPhillips announced it will cut its 2017 capital spending budget by 4 per cent. The company had originally planned an ambitious spending program this year, but says stalled oil prices have forced them to cut back.
Earlier in the week, Hess and Anadarko also announced they would cut back their capital programs.
Conoco Chief Ryan Lance said in a statement “We remain focused on lowering our breakeven price for the business, generating free cash flow and delivering strong per-share growth with improving returns through the price cycles. “
The Houston-based company says it will spend $4.8 billion in 2017, down from its prior estimate of $5 billion.
