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Royal Dutch Shell (RDSB) – Finals PTP: £25,191m (£22,731m) Divi: 18.11p (16.6p)

The phrase haunting head honchos of the big integrated players in the oil industry this year is likely to be ‘reserves replenishment rate’. This refers to a comparison between the level of new recoverable reserves booked with the amount of oil being pumped. The last few years has seen the majors struggle to make much progress in this department, with the dominance of national oil companies increasing the squeeze on conventional sources.

Against this backdrop it is fair to say that Shell’s failure to report reserves alongside its numbers for the year is not exactly reassuring. The figures will be released in March and the firm is under no compulsion to make an announcement now but, in the last few years, Shell has never neglected to update the market on reserves when announcing its results. The share price, which has already come off sharply since January, retreated further in response and is currently around the £17 mark. In terms of the financials – despite posting record profits for a UK-listed company and attracting headline grabbing accolades like the fact that the oil giant makes £1.5 million an hour – the results were actually just below market expectations.

The high oil price has obviously boosted profits and has even led to accusations of profiteering being levelled at the company but as Keith Morris of broker Evolution Securities observes: ‘Overall, the results were fairly unexciting and the outlook from the group is unchanged.’

Shares says: For a number of reasons Shell is struggling to boost its level of reserves despite big increases in capital expenditure.

by: Tom Sieber