Shell says on track with asset sales as Q4 earnings disappoint

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Chief executive Ben van Beurden said: "We are reshaping Shell and delivered a good cash flow performance this quarter with over 9bn United States dollars (£7.1bn) in cash flow from operations".

Dealmaking in the oil and gas sector has been muted for more than two years due to collapsing oil prices, but as crude prices recover buyers and sellers are starting to agree on price tags.

In the final three months of its financial year, the FTSE 100-listed group reported a 14% year-on-year increase in profits adjusted for one-time items and inventory changes advanced to $1.8bn, falling short of the expected $2.8bn figure.

The company's divestments, completed, announced or in progress totaled $15 billion previous year.

Royal Dutch Shell plc (ADR) (NYSE:RDS.A) have shown a low EPS growth of -37.90% in the last 5 years and has earnings growth of 114.50% yoy. Investors looked beyond the disappointing profit and sent the company's B shares 1.6 percent higher in London, the biggest gain since December 12.

Shell reiterated its plans for capital investment of around $25 billion this year, down from full-year 2016 organic capital investment of $26.9 billion.

Shell's chief executive Ben van Beurden, however, noted in the statement that the company had delivered $9 billion in cash flow from operations in the last quarter of 2016.

The company said that bet on BG is already paying off. Oil and gas production rose 28% in the fourth quarter compared with a year earlier, with BG assets adding 824,000 barrels of oil equivalent a day.

Following Shell's announcement this week of assets sales in the United Kingdom and Thailand worth up to $4.7 billion, Shell said it has agreed or completed some $15 billion worth of asset sales since a year ago, half the $30 billion divestment program target by 2018 to help cover the cost of the BG acquisition.

Earlier this week Shell announced it will sell off a package of North Sea assets for up to $3.8 billion (£3 billion) to smaller rival Chrysaor.

Cash-flow generation in the fourth quarter already came in well above analysts expectations, buoying Shell's share price despite the dismal profit numbers. There's a way to go before the company can raise this to double-digits, van Beurden said. The firm has a 50-day moving average of GBX 2,315.53 and a 200-day moving average of GBX 2,122.20. United Kingdom producer BP Plc is due to report results on February 7, and France's Total SA on February 9. The company disclosed that its integrated gas earnings included a net charge of $879 million, primarily reflecting a charge of some $430 million related to the impact of the weakening Australian dollar.