"Oil's Well" at Royal Dutch Shell
LONDON -- Royal Dutch Shell (ISE: RDSB.L) can influence the volume of oil and gas it finds and refines. It can even control refining margins. But one thing it can't do is control the price of oil and gas, which is determined by market forces.
This morning, the U.K.'s largest integrated oil company posted a drop in second-quarter earnings from $8 billion to $6 billion. The company said profits have fallen with energy prices but its growth strategy is delivering to the bottom line.
The company said:
Our industry continues to see significant energy price volatility as a result of economic and political developments. Shell is implementing a long-term, consistent strategy against this volatile backdrop. Our plans for organic capital investment of around $32 billion in 2012 and medium-term financial and production growth are on track. ...
Shell has continuous improvement programmes in place to increase operational uptime and performance and to control costs. The new projects we've built in recent years are driving growth in the company today, and our investment decisions should drive oil and gas production for decades to come, with more than 20 key upstream projects under construction today.
The company also had some comforting news for income investors. It said: "Our profits pay for Shell's dividends and substantial investments in new projects, to ensure affordable and reliable energy supplies for our customers, adding value for our shareholders."
The company distributed $2.8 billion worth of dividends in the first quarter, and investors can expect more of the same in the second quarter. Royal Dutch Shell said it will lift its second-quarter payout by 2.4% compared to last year. The news puts the company on course for a full-year dividend payout of 105 pence, which equates to a prospective yield of 4.8% at today's share price of 2,185 pence.
Royal Dutch Shell may not be on Neil Woodford's list of favorite shares. But the legendary income investor may be missing a great opportunity. To find out what Neil Woodford does hold in his portfolio, you can download this free Fool report. But hurry, the report is available for a limited time only.
Investing is by no means easy in today's uncertain economy. That's why we've published "Top Sectors Of 2012" -- our guide to three favorable industries. This free report will be dispatched immediately to your inbox.
Further Motley Fool investment opportunities
The article "Oil's Well" at Royal Dutch Shell originally appeared on Fool.com.
David says if you want to go well... you have to go Shell. He owns shares in Royal Dutch Shell.The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
