Shell share price: Group gears up for ‘lower forever’ oil

Comments come as oil major delivers surge in profits

Shell share price: Group gears up for ‘lower forever’ oil

Royal Dutch Shell (LON:RDSA) is getting ready to face a world of ‘lower forever’ oil prices, Reuters has reported, quoting the group’s chief executive. The comments came as the Anglo-Dutch oil major revealed a surge in quarterly profits and free cash flow yesterday.

Shell’s share price has advanced in London in today’s session, having added 0.65 percent to 2,113.00p, outperforming the broader UK market, with the benchmark FTSE 100 index having fallen into the red and currently standing 0.51 percent lower at 7,404.81 points. The group’s shares have added more than six percent to their value over the past year, but have given up some five percent in the year-to-date.

Reuters quoted Shell’s chief executive Ben van Beurden as saying yesterday that with oil prices hovering around $50 a barrel and forecasts of only a modest recovery by the end of the decade, the group was not planning to stop its cost cutting drive.

Shell is now ‘getting fit’ to be profitable in a world where oil trades at $40 a barrel, he pointed out, adding that the external price environment and energy sector developments meant that the company will “remain very disciplined”.

His comments came as Shell revealed that its profits had jumped in the second quarter of the year, with the oil major benefitting from higher crude prices and strong refining performance. The Anglo-Dutch group, which has been offloading assets in the wake of the BG Group acquisition, further posted a rise in cash flow.

Reuters quoted Brendan Warn, analyst at BMO Capital Markets, which has an ‘outperform’ rating on Shell, as commenting that the oil major’s performance was “beginning to show the underlying potential of Shell’s ability to generate operating cash flows in the current oil price environment”. 

As of 14:54 BST, Friday, 28 July, Royal Dutch Shell Plc 'A' share price is 2,115.00p.

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