Hot stock: Royal Dutch Shell
Key statistics: Royal Dutch Shell (LON:RDSB)
10/11/15 closing share price: £16.92 52 week high: £24.09 Dividend yield: 7.06% Dividend per share: £1.88
Royal Dutch Shell is an independent oil and gas company. The Company is engaged in the principal aspects of the oil and gas industry in more than 70 countries. The Company operates in three segments: Upstream, Downstream and Corporate.
In Upstream, the Company focuses on exploration for new liquids and natural gas reserves and on developing new projects. In Downstream, the Company focuses on turning crude oil into a range of refined products, which are moved and marketed around the world for domestic, industrial and transport use.
The Company's Upstream Americas business manages Shell's Upstream activities in North and South America.
It also extracts bitumen from oil sands that is converted into synthetic crude oil. The Company's Upstream International business manages Shell's Upstream activities outside the Americas. The Company's Downstream business manages Shell's refining and marketing activities for oil products and chemicals.
Royal Dutch Shell released its third-quarter 2015 results, reporting a tidy operational performance within the context of a difficult operating environment.
Shell's upstream operations were the standout, delivering a 3.2% rise in production year on year to 2.9 million barrels of oil equivalent (boe).
However, Shell's positive third-quarter operational performance could not stave off weaker energy prices, with earnings falling 70% year on year to $US1.8 billion ($2.5 billion).
In terms of segment earnings composition, Shell's downstream operations reported a 46% increase year on year to $US2.6 billion, while upstream dragged with a loss of $US425 million.
We are of the view that Shell's shares offer good value on a medium-term view. In particular, we note the robust balance sheet reflected in gearing of 12.7% and a dividend yield of circa 7%.