Carmon Creek was sanctioned by Shell in October 2013 and in May the company said it would defer the project by two years to try to take advantage of the price slump and cut costs.
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The move, said the company, comes after a review of the project’s design and costs and where it stacks up against other projects Shell has in its portfolio. Rival Anglo-Dutch oil giant Shell, under chief executive Ben van Beurden, is also ready to report that it has been financially bombarded.
Van Beurden said that suspending the Carmon Creek oil sands project was done because of the “economic environment” as well as “uncertainty about the evacuation route”, a reference to continuing controversy over the construction of pipelines that would carry bitumen from the project to distant refineries.
On September 28, Shell announced that it would leave its Arctic offshore projects for the foreseeable future. Natural gas prices, meanwhile, were down by about one-third over that period.
Interior Secretary Sally Jewell has said the government was holding Shell to the highest standards to ensure safety.
Holding these shares for the long term is still the best play, regardless of what the company’s earnings results reveal Thursday. Shell said earnings were impacted by non-cash charges of a few $1.0 billion related to adverse currency exchange rate effects on deferred tax positions and financing items which were not included as identified items. That missed the $2.92 billion average estimate of 17 analysts surveyed by Bloomberg.
As of Sep 30, 2015, this Zacks Rank #3 (Hold) company had $31.8 billion in cash and $55.6 billion in debt (including short-term debt).
“The sector is rapidly moving into the red”, Jefferies oil and gas equities analyst Jason Gammel said.
LNG volumes sold by the company were down by 7% in Q3, at 5.31 mt, reflecting an unplanned shutdown at the North West Shelf project in Australia, the company’s sale of its stake in Woodside Petroleum and the transfer of its 15% share in Malaysia LNG to Petronas. Why the implied confidence in Royal Dutch Shell’s dividend? Total SA shelved a $11-billion plan to build the 160,000 barrel-a-day Joslyn mine in May 2014, citing high costs. Investors should consider a company’s entire financial and operational structure in making any investment decisions.
Analysts believe the company took the worst of the hit in Thursday’s results.
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And the group took a $3.7 billion charge as it revised down its long-term oil and gas price outlook. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. The European oil and gas index was largely flat.
