"Royal Dutch Shell Plc's (RDS.A:NYSE; RDS.B:NYSE) biggest takeover, the subject of intense investor scrutiny during crude's collapse, is starting to pay off as Europe's largest oil company chalks up its highest profit in five quarters," Bloomberg reported after Shell released its Q3 results on Nov. 1.
"Royal Dutch Shell has cheered investors with a $1.4bn (£1.1bn) profit for the third quarter, as the takeover of BG Group boosted production and it rebounded from a massive $6.1bn loss caused by writedowns in the same period last year," energy editor Emily Gosden wrote in the Telegraph on Nov. 1.
The Bloomberg report went on to describe how, following the acquisition, Shell's "third-quarter results show that higher production, deeper cost cuts and tighter spending are boosting the bottom line."
"Gearing at the end of the third quarter 2016 was 29.2% versus 12.7% at the end of the third quarter 2015. This increase mainly reflects the impact of the acquisition of BG," Shell stated in its press release.
According to Bloomberg, Shell CFO Simon Henry stated that the company's Q3 production is up 25% over the previous year, to 3.6 million barrels of oil equivalent per day. BG has "ramped up" production to about 800,000 barrels a day.
Bloomberg also quoted analyst Oswald Clint of Sanford C. Bernstein & Co.: "Investors can finally see what the new Shell can do. . .the BG acquisition is finally delivering."
According to the Telegraph article, "Analysts at Barclays said strong cashflow, combined with the reduced operating and capital expenditure and divestments, 'should prove enough to reassure investors that Shell is well on its way to resetting the business post the BG deal.'"
Want to read more Energy Report articles like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.
Disclosure:
1) Tracy Salcedo compiled this article for Streetwise Reports LLC. and provides services to Streetwise Reports as an independent contractor. She owns, or members of her immediate household or family own, shares of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: Royal Dutch Shell. The companies mentioned in this article were not involved in any aspect of the article preparation. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview or article until after it publishes.
