How Shell’s Stock Performed after Its 2Q16 Earnings Release



Shell’s stock performance

Royal Dutch Shell (RDS.A) announced lower-than-expected earnings on July 28, 2016, before the markets opened. Shell’s stock opened at $52.36 per share, lower than the previous close of $53.95.

Shell saw highs of $52.44 and lows of $51.96 during the day. Eventually, Shell closed at $52.35, around 3.0% lower than its previous day’s close, which was in line with peers Statoil (STO), PetroChina (PTR), and YPF (YPF).

On July 28, 2016, Shell’s peers STO, PTR, and YPF fell by 1.7%, 0.9%, and 0.3%, respectively. The crude oil price fell by 1.9%, but the natural gas price rose by 7.5% on the day. The Vanguard High Dividend Yield ETF (VYM) has ~10% exposure to energy sector stocks.

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Shell’s 2Q16 update

In 2Q16, Royal Dutch Shell (RDS.A) incurred total capital investments of $6.3 billion compared to $7 billion in 2Q15. Of the total investments in 2Q16, $3.7 billion was in the Upstream segment, $1.4 billion was in the Downstream segment, and $1.2 billion was in the Integrated Gas segment.

The combined capital spending for Shell-BG through 2020 is expected to be in the range of $25 billion to $30 billion. Shell continues to work on its strategy of optimizing capex and exiting non-competitive projects and assets. Shell plans to sell $6 billion to $8 billion of assets in 2016. Plus, Shell expects its cost reduction initiatives to continue in 2016.

Per Shell’s management, “We are managing the company through the down-cycle by reducing costs, by delivering on lower and more predictable investment levels, executing our asset sales plans and starting up profitable new projects. At the same time, integration of Shell and BG is making strong progress, and our operating performance continues to further improve.”


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