The share price of Shell (LSE: RDSB) (NYSE: RDS.B.US) was flat during early trading this morning after the firm announced profits fell to $16.8bn from $27bn in 2012. Shell’s struggles have been well documented and a profit warning was announced in January. The shares have lagged the wider market over the last 12 months, falling 1.5%.
In response Shell is cutting upstream spending in America by 20%, with the firm re-evaluating its shale operations, which it now sees as an opportunity for the longer term.
To bolster its capital strength the oil producer has embarked on a programme of asset sales that could deliver $15bn by 2015.
Shell produced less 3.2m barrels of oil equivalent a day in 2013, while sales of liquefied natural gas totalled nearly 20m tonnes. Both these figures fell below 2012 levels.
The chief executive, Ben van Beurden, commented:
“Our strategy remains robust, but 2014 will signal a change of emphasis. We will concentrate on improving returns and cash flow performance, with a focus on three main priorities: improving our financial performance, including restructuring our Oil products and North American shale oil and gas businesses; enhancing our capital efficiency; and maintaining our strong track record of delivering new projects, while integrating our recent acquisitions.”
“These will not only be the foundation of our future competitiveness, but also help to supply the world’s growing energy needs.”
Shell is committed to a progressive dividend policy and its full year dividend came in at 108p, or a yield of 4.9% at today’s share price. Shares in Shell may trade on a forward P/E of 10 based on earnings projections for 2014.
Of course, the decision to buy — based on those ratings, today’s results and the wider prospects for the oil and gas sector — remains your decision.
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Mark does not own shares in Shell.