Monthly Archives: April 2009

By Izabella Kaminska

Shell follows BP in reporting significant declines in yearly profits, but a better-than-expected performance in the quarter:

1ST QUARTER 2009 UNAUDITED RESULTS

* Royal Dutch Shell’s first quarter 2009 earnings, on a current cost of     supplies (CCS) basis, were $3.3 billion compared to $7.8 billion a year  ago. Basic CCS earnings per share decreased by 57% versus the same quarter  a year ago.

* Cash flow from operating activities for the first quarter 2009 was $7.6     billion. Net capital investment for the quarter was $6.9 billion. Total     cash returned to shareholders in the form of dividends was $2.4 billion.

* A first quarter 2009 dividend has been announced of $0.42 per share, an     increase of 5% over the US dollar dividend for the same period in 2008.

And the headline on the results from the financial press is that all things considered, both BP and Shell have put in a good run. Of course, the headline comparatives used by different media vary. Bloomberg, for example always opts to focus on the net income figure while Reuters leads with the industry’s preferred measure, profits adjusted for current cost of supply in Shell’s case.

Kate Mackenzie

On Energy Source:

Climate talks: What China, India and Brazil want Contrary to some reports, big developing nations are willing to negotiate curbs

Shell counts cost of lower oil price Profits fall, oil outlook bearish

China’s path to low carbon growth ‘must start now’ It is possible, but difficult for China to avoid its climate change

UTS rejects Total’s bid Shares then fell below the offer prices

Valero benefits from oil price drop What’s bad for super-majors is good for refiners

Number of solar plants in the US Very few, but NPR’s graphic is worth a look


Elsewhere:

Politics: Waxman-Markey: Tweak it or overhaul it? Experts debate how to get it through

Oil services: Danger of having BP’s contractors over a barrel Forcing contractor costs too low could threaten their ability to stay in business (The Times)

Efficiency: The efficiency paradox: Will driving lower fuel cars reduce energy use? (Boston Globe)

Economics: The road to economic recovery lies in climate recovery So says UK environment minister Ed Miliband (Huffington Post)

Driving: Mileage tax is alive and living in Congress Despite everyone thinking it was dead two months ago (Infrastructurist)

Fiona Harvey

The Major Economies Forum on Energy Security and Climate Change took place in Washington DC on Monday and Tuesday of this week, at which 17 of the world’s biggest emitters, including many developing countries, tried to make progress on forging a successor to the Kyoto protocol, which the United Nations says must be complete by the end of this year.

Breakthroughs were not expected to come out of this forum, which is a rebranding of a Bush initiative, the Major Economies Meeting and takes place outside the auspices of the UN. The Major Economies Forum is expected to yield more substantive results at its next meeting in July. So what did come out of this week’s meeting?

Kate Mackenzie

Updated: Yesterday BP reported net profits were down 62 per cent, and today it is Shell’s turn to count the cost of lower oil prices with its first quarter profits down 58 per cent year-on-year.

And Peter Voser, who will take over as chief executive in July, is less optimistic than some commentators about the oil price outlook, saying he did not expect it to rise significantly in the next 12 to 18 months. “It will take time for the economy to recover, and hence the oil and gas price will be affected by that,” he told journalists on a conference call.

Shell’s $3.3bn (£4.85bn) profit beat analysts’ consensus forecasts of $2.6bn. However, as our story notes, Shell is failing to cover its capital spending programme and its dividend payments from its income, and its debt is rising accordingly.

Shell, like several of its super-major peers, has commited to maintaining its capital spending in 2009 despite the low oil price. In contrast to BP however, it has also promised to continue raising its dividend this year.


Related links:

Shell follows BP with 58% first quarter fall (FT, 29/04/09)
Shell Q1 statement
(Shell, 29/04/09)
BP’s 62 per cent profit drop sets tone for big oil (FT, 28/04/09)

Fiona Harvey

A new report suggests that the Chinese economy could grow tenfold by 2050 while keeping the country’s greenhouse gas emissions within manageable limits.

The report, from the Tyndall Centre, found that through a programme of low-carbon investment, China could cause its emissions to peak in 2020. If that could be achieved, the world’s chances of keeping warming to 2°C – the limits of safety – would be greatly improved.

But getting to the point where China’s emissions growth can be reversed by 2020 will be extremely tough. It must start now, the researchers said.

- BP’s 62% profit drop sets tone for big oil
Company promises more cost cuts to strengthen finances (FT)

- BP chief executive Tony Hayward tries to keep it simple
Downward press on costs is ongoing, but not at cost of growth (FT)

- Ford chairman calls for petrol tax to drive change
Comments are clear break with rest of US car industry (FT)

- Vestas to eliminate more than half of UK workforce
Wind-turbine maker blames government for failing to support sector

- Sinopec expects higher profit after China eases price controls
Will step up oil exploration to diversify revenue stream from refining (Bloomberg)

- Total abandons bid for UTS Energy
Shareholders rejected revised offer on belief oil prices to recover (FT)

- EDF and RWE team lead race to build UK nuclear power stations
Britain to make £400m from auction of land for future stations (FT)

- Venezuela delays bidding for oil projects by three months
Move affects 3 projects to develop ultra-heavy oil in Orinoco belt (Reuters)

- KSK Power Ventur to step up from Aim market
Company aims to broaden shareholder base (FT)

- Lex: Crude plug and PetroChina

Carola Hoyos

It appears not only Christophe de Margerie of Total believes oil prices will eventually recover: UTS Energy shareholders rejected Total’s deep pockets and diversified portfolio, ending the French company’s attempt at a hostile takeover.

The key question for shareholders was whether Fort Hills, UTS’s Athabasca oil sands play, would be developed. The answer depends in large part on whether future oil prices will be high enough to justify the environmentally messy and expensive venture.

The mining project is already delayed past its 2012 production start date and other partners Petro-Canada and Teck-Cominco are in a spot of disarray with mergers, cold feet, low oil prices and high costs making some chief execs stand back, do nothing and even consider hoping for good offers.

And what about UTS? One hint that shareholders may not be rejoicing quite as much as the past lobbying effort against Total by West Face Capital, UTS’s largest shareholder, would suggest, is today’s share price: UTS shares slid as much as 24 per cent to well below Total’s offer. Makes one think Total’s second, improved offer of C$1.75 wasn’t so cheeky after all.
Related links:

Total raises hostile bid for UTS Energy (FT, 13/04/09)
Total, the peak oil believer’s favourite IOC (FT Energy Source, 16/04/09)

Sheila McNulty

Last year, as the Big Oils were reporting big profits, refiners were struggling with high feedstock prices and dropping demand for their end products at the pump.

How times have changed: oil company profits are down while earnings at Valero, the US’ biggest refiner, have risen sharply.

Kate Mackenzie

About two, judging from this NPR guide:

The interactive presentation has a lot more.

Related links:

Scope of clean energy, climate bills begin to take shape (CNet)

Fiona Harvey

Here is the full text of Al Gore’s statement on the US climate bill, which some in Washington have been portraying as a re-match of the battles of the Clinton administration in the 1990s in which Gore was pitched against Newt Gingrich, then speaker of the House.

Mr Gingrich strongly opposes the climate bill. He has called it “a big energy tax” and said it did not contain policies to to “spur innovation and utilize the creativity of America’s scientists and engineers”.

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