Does Royal Dutch Shell Have a Bright Future?

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With shares of Royal Dutch Shell (NASDAQ:RDSA) trading around $70, is RDSA an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Royal Dutch Shell operates as an independent oil and gas company worldwide. The company explores and extracts crude oil, natural gas, and natural gas liquids. It also converts natural gas to liquids to provide fuel and other products, as well as engages in manufacturing, supplying, and shipping crude oil. The company holds interests in approximately 30 refineries, 1,500 storage tanks, and 150 distribution facilities.

Royal Dutch Shell has agreed to sell a stake in one of its Brazilian offshore assets to Qatar’s state-owned oil and gas company for $1bn. The disposal of a 23 per cent share in Parque das Conchas project, also dubbed BC-10, to Qatari Petroleum International comes as the Anglo-Dutch major is likely to step up efforts to raise cash in 2014 and 2015. Shell, Europe’s largest oil company by market value, has been accused by investors of spending too much in recent years and Ben van Beurden, the new chief executive who took the reins at the start of this year, is under pressure to improve capital discipline. As part of that, Shell is expected to sell some $15bn worth of assets over the next two years in one of the largest disposal programmes in its history. Already this year it has announced the sale of a stake in the Wheatstone LNG project in Australia to its Kuwaiti partners and is also eyeing the sale of an interest in a pipeline in the U.S.

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