Headlines
Royal Dutch Shell (LON:RDSA – 1739p/1750p) – You Can be Sure of Shell: We believe that today’s update is the clearest sign we have seen that the Company is starting to move in to the next phase of growth, and while it seems strange to think that a company this size will grow, the changes that are afoot currently will see the company better able to maintain its position in the market.
In Brief:
Independent Oil and Gas (LON:IOG – 21p) – Skipper's in Charge
Rose Petroleum (LON:ROSE – 0.17p) – What Is It?
News Items
Royal Dutch Shell (RDSA/B LN – 1739p/1750p) – You Can be Sure of Shell
Traditionally Shell has been a case of the whole being less than the sum of parts with the drive and quality of the operational team stymied by the executive management. Today's update, however, is a good assessment of where it is, and more importantly for us, how it will get to where is needs to be in the future. While we have always thought that the executive management team and the way it has been arranged have been out of touch with both modern operating practices and the quality of the operating teams, it has obviously operated well enough.
More recently, however, we have sensed a sea change in the Company's philosophy, with the executive now appearing (as is evident in this update) to start to catch up with the mood, tempo, thoughts and forward thinking of the operations teams. In short, the entrepreneurial oil men at the operations level are starting to filter up through the ranks, and are making their presence felt in the way the Company does business.
As a result, we see a future where it could become more lithe and adaptable to the market. While you can never be certain whether this is a response to the BG influence, we believe that it is more likely to be the fact that BG's arrival in to the fold has forced the Shell executive team to liberate those members within its operating group that have historically been marginalised.
Paradoxically, while BG was a strategic acquisition to put the Company back in the gas race, we believe it will ultimately make the whole company operate better. Now, if it could only move away from its arcane structure, remove a few layers of management that shouldn't be there, become an integrated operating entity rather than a collection of regional business units, then there could be a company that could challenge Exxon for the heaviest gorilla in the jungle.
We believe that today’s update is the clearest sign we have seen that the Company is starting to move in to the next phase of growth, and while it seems strange to think that a company this size will grow, the changes that are afoot currently will see the company better able to maintain its position in the market.
In Brief
• Independent Oil and Gas (IOG LN – 21p) – Skipper's in Charge: Today's news that skipper has been moved to July is good news, as it ends speculation over whether it would happen at all. While there is a long way to go before this field will be on stream, we don't get the impression that the Company will hang around and prevaricate like Xcite have done with its heavy oil field. While arguably there should have been an oil sample taken at the time of the initial discovery and testing for assay and design needs, that this well will also allow for further reservoir delineation is a positive, and if the well proves up the deeper prospectivity, then this will have been a very worthwhile well indeed. On the basis that the well will create interest in the shares, we believe that they will trade up on the news, but ultimately, it is Skipper's development that will be the real catalyst to the C ompany's revaluation.
• Rose Petroleum (ROSE LN – 0.17p) – What Is It?: We are struggling to see how this company can continue in this vein without adjusting its name or business. The oil and gas assets, although prospective, need a focus and attention that they are not going to get while competing with mining projects. As we have said before, each have their own investment cycles and risk profiles, and have no commonality between them, and as such, the Company should be split and one business unit issued to shareholders as a dividend in specie. Both businesses are embryonic and need further capital, and we do not see that being delivered efficiently by a single structure.