It has been a very difficult year for Royal Dutch Shell with problems in Nigeria and weaker global demand. It lost $347 million on its exploration and production business in the Americas, too. The company is retrenching, selling off assets around the world. "We are facing headwinds from weak industry refining margins, and the security situation in Nigeria, which continue to erode the near term outlook," noted CEO Peter Voser.
Guidance from Shell is that earnings will improve in 2014.
But there are still significant capital expenditures ahead. In the third quarter, Shell spent $9.7 billion on capital investment. For the year, $45 billion has been planned. The return on average capital employed for Royal Dutch Shell is down to 10.4% for the third quarter from 13.5% in 2012.
While Shell has underperformed the major oil sector, the share price has risen by 6.71% for 2013. By contrast, ConocoPhillips (COP)
Shell continues to move forward, seeking opportunities around the world.
Earlier this month, Shell announced that along with Petrobras (PZE)
While off more than 4% in early morning action due to the bearish results, the long term outlook for Royal Dutch Shell is bullish.
Part of the future upside results from the inferior stock performance from the past as Royal Dutch Shell has not fared as well in this year's bull market as its Big Oil peers, especially those from Europe. Total, the French oil giant, has risen more than 22%. Now around $27 a share, Repsol (PINK: REPYY), a major oil firm from Spain, is up from its year low of $18.96.