Shell drama: breakup push, profit miss, CO2 target
Royal Dutch Shell reported weaker-than-expected third-quarter earnings on Thursday, a day after a high-profile investor called for fundamentally restructuring the company.
By the numbers: Shell listed $4.13 billion in net profit, down from $5.5 billion in Q2. It reflects the "adverse impact of Hurricane Ida" on operations — a $400 million hit — and "lower contributions from trading and optimization partly offset by higher oil and gas prices," according to CNBC.
The company announced a new target of cutting emissions from its operations and energy used to power them by 50% by 2030. Shell calls it another step toward becoming a "net-zero" company by 2050.
- The company hopes to achieve the 2030 target via steps like improved efficiency, ending "routine flaring" by 2025, carbon capture, "quality nature-based solutions" and more.
- It doesn't address Scope 3 emissions — that is, CO2 from the use of its products in the economy. Those are by far the biggest piece of the sector's emissions.
Billionaire activist investor Dan Loeb, via his hedge fund Third Point, has reportedly taken a stake in Shell valued at $750 million (per Bloomberg) and wants a big rethink.
- The Wall Street Journal first reported his stake and letter to investors, and summarizes it like this: "Shell should consider creating two stand-alone companies: one with legacy businesses such as refining that would provide steady cash flow and another that houses renewables and other units requiring substantial investment."
- Shell, in a statement, said it has had "preliminary conversations" with Third Point.
Go deeper: Climate reckoning for oil and gas CEOs