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Shell’s Key Upstream Projects Are Ready to Deliver

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Shell’s growing upstream portfolio

Royal Dutch Shell’s (RDS.A) upstream portfolio comprises deepwater, integrated gas, conventional oil and gas, and shale assets. In these categories, Shell’s projects are expected to bring production, earnings, and cash flow growth to the company up until 2020.

Let’s begin by reviewing Shell’s key projects. They include deepwater projects in Brazil and the Gulf of Mexico, its integrated gas project, Prelude, conventional oil and gas projects Clair Phase 2 and Kashagan, and megaprojects with peak production levels of 150 Mboepd (thousand barrels of oil equivalent per day). Prelude, where the company has opened four of seven wells, is set to produce 3.6 million tons of liquefied natural gas and 1.7 million tons of natural gas liquids.

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Further, Shell’s mega project, Appomattox, with peak production levels of more than 175 Mboepd, is expected to start production in this year’s fourth quarter. The Permian, where the company produces 145 Mboepd, has a matured inventory of 1 billion barrels of oil equivalent. The company expects its Permian break-even costs to be just below $40 per barrel, making the region lucrative even at lower price points in the oil cycle.

Overall, Shell’s major projects are expected to contribute more than 600 Mboepd of net new production in 2018 and 2019. Shell also has other projects under construction, which are expected to produce more than 250 Mboepd for the company by 2020.

Comparing Shell’s fourth quarter with peers’

In the fourth quarter, Shell produced 3.79 MMboepd (million barrels of oil equivalent per day) from worldwide operations, while ExxonMobil’s (XOM), Chevron’s (CVX), and BP’s (BP) production was 4.01 MMboepd, 3.08 MMboepd, and 2.63 MMboepd, respectively.

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