Royal Dutch Shell expert Christian Stadler says the Anglo-Dutch company has all the fundamentals in place to still be a firm to bet on despite its disappointing results announced today (Thursday).
Europe’s biggest oil company missed targets for fourth-quarter earnings in 2012, posting $5.6bn (£3.5bn) after one-time items and inventory changes. The results were 15 per cent above the previous year but well below analysts’ expectation of around $6.3 (£3.9bn).
Dr Stadler says Royal Dutch Shell has been hit by falling oil prices, but in the long term they have everything in place to be the company to back in the oil industry.
The Warwick Business School Associate Professor, who has studied Royal Dutch Shell for 15 years, said: “In coming years the economy is uncertain and this has an impact on oil prices. Obviously this will impact Shell as well but in terms of fundamentals they are a company to bet on.
“We have to keep these results in perspective. They are not surprising considering the volatility of the oil price over the past year
“They still had profits of $27bn and the company is well positioned to do well in years to come.
“In the oil industry three things matter: your ability to develop and handle cutting edge technology, your relationship with governments, and your ability to manage large capital projects. In all of these three areas Shell is among the strongest in the industry.
“This is particularly the case in terms of technology. Shell are at the leading edge in many areas in the oil industry, including floating LNG, oil sands and piped gas.”
Professor Stadler believes the company's dual-nationality and organisation also gives them an advantage over their competitors.
“And in terms of relationships with governments, they have the unique advantage of dual nationality which allows them to position them accordingly in negotiations with governments,” said the Associate Professor of Strategic Management .
“They also have a very decentralised approach. As a result they are often perceived as a local company. This is a distinct advantage compared to Exxon.”