"We will make BP pay for the damage their company has caused," Obama said in an 18-minute speech. "And we will do whatever necessary to help the Gulf Coast and its people recover from this tragedy." President Barack Obama said authoritatively.
I have only one simple illustration from a book to show that the brave President Barack Obama of the United States of America has balls, but Nigerian Presidents have none in addressing emergencies.
The failure of the Nigerian government to check the excesses of Chevron, Shell and other oil companies have made them to disregard their rules of engagement, because these oil companies spill more oil into the Niger Delta each year than was spilled as a result of the Deepwater Horizon disaster that devastated the Gulf of Mexico in 2010. President Barack Obama did not waste time to address the emergency and compelled the BP to pay.
"We will make BP pay for the damage their company has caused," Obama said in an 18-minute speech. "And we will do whatever necessary to help the Gulf Coast and its people recover from this tragedy." President Barack Obama said authoritatively.
BP set up a $20bn compensation fund after the Deepwater Horizon disaster and has so far paid out 19,000 claims totalling more than $240m and BP's bill for containing and cleaning up the oil spill has reached nearly $10bn (£6.4bn).
President Obama did not need to commission the United Nations Environment Protection (UNEP) and did not pay for any assessment or disaster management report before compelling BP to pay for the catastrophic Deepwater Horizon disaster in the Gulf of Mexico.
"The oil industry has been a key sector of the Nigerian economy for over 50 years, but many Nigerians have paid a high price, as this assessment underlines," said Achim Steiner, U.N. under-secretary general and the executive director of the U.N. Environment Program, which carried out the report.
Yet, our inept and incompetent government failed to prosecute the indicted Royal Dutch Shell PLC, Chevron and other
multinational oil companies to pay for the collateral damages they have been doing in the Niger Delta for decades.
The failures of the government and the impunity of the multinational oil companies provoked the rise of insurgency in the Niger Delta.
Every administration of the Nigerian government has failed to prosecute the multinational oil companies destroying the communities of oil producing states in the Niger Delta.
The Nigerian Navy has failed to stop oil thieves from overseas who have been engaged in illegal bunkering and stealing hundreds of thousands of barrels of our crude oil. And multinational oil companies have not been paying all the required taxes. Chevron Nigeria Limited has been indicted for tax evasion and the mainstream news media compromised the ethics of the press by not publishing the scandalous impunity of Chevron and other multinational oil companies in Nigeria. Even when I wanted to pay for an advert on their crimes, the mainstream newspapers asked me not to identify them, because they did not want to lose the patronage of Chevron and other multinational oil companies.
See CHEVRON IN $10.8 BILLION TAX FRAUD IN NIGERIA
http://nigeriantimes.blogspot.com/2005/08/chevron-in-18-billion-tax-fraud-in.html
We have become the accomplices of the foreign powers plundering the Niger Delta?
Once they settle us, we will not report their evils.
President Barack Obama did not spare BP over the Deepwater Horizon oil spill in the Gulf of Mexico which flowed for three months in 2010.
Read the report on 50 years of oil spills in Nigeria on http://www.naijafeed.com/naijafeed/2010/7/26/video-50-years-of-oil-spill-in-nigeria.html.
The Nigerian government has failed to support the Ogoni people in their quest to make Shell pay for the collateral damages done to their environment. What we have is a government of political hypocrisy in the masquerade of democracy.
Shell and Cosan: fuelling a lower-carbon future with biofuels
The Hague and São Paulo, June 2, 2011 /PRNewswire/ — Shell and Cosan today launched a multi-billion dollar joint venture that will become a leading producer of the low-carbon biofuel, ethanol made from sugar cane. Named Raízen, this major retail and commercial fuels company will operate in Brazil, one of the world's fastest-growing markets.
In one of the biggest biofuels deals to date, Shell is combining its extensive retail experience, global network and research in advanced biofuels with Cosan's technical knowledge of producing biofuels on a large scale. Raízen will produce and sell over 2 billion litres a year of the lowest-carbon biofuel commercially available - ethanol made from Brazilian sugar cane.
Shell is already one of the largest distributors of sustainable biofuels: now it is moving for the first time into production. The deal with Cosan is a major development in Shell's strategy of investing for selective growth in its fuels business.
Raízen will distribute biofuels and over 20 billion litres of other industrial and transport fuels annually through a combined network of nearly 4,500 Shell-branded service stations. In Brazil it becomes the third largest fuels company. Plans would extend the company's reach in future years to export more ethanol to other key markets.
Low-carbon biofuels will be the most practical and commercially realistic way to take carbon dioxide (CO2) out of transport fuel in the coming years and will be a vital part of the future energy mix.
The joint venture also combines Shell's expertise and technology partnerships in advanced biofuels with Cosan's experience in the commercial production of low-carbon biofuels. This has the potential to accelerate the commercial production of biofuels from crop waste and inedible plants.
Raízen's 24 mills can process up to 62 million tonnes of cane into sugar or ethanol each year, with the flexibility to adapt to market demand.
"We are building a leading position in the most efficient ethanol-producing country in the world,” says Peter Voser, Shell Chief Executive Officer. "Low-carbon, sustainable biofuels will be increasingly important in the global transport fuel mix."
"This is a turning point in the search for alternative energy sources," says Rubens Ometto Silveira Mello, Cosan's Chairman of the Board. "Raízen is one of Brazil's largest companies and is ready to offer international markets a clean, renewable and economically viable solution." Meeting demand
New energy policies in Europe and the USA are calling for more renewable, lower-carbon fuels for transport. Biofuels make up around 4% of transport fuel in Europe, and 3% in the USA. Globally biofuels currently meet around 3% of road-transport fuel demand. Shell expects this to rise to about 9% by 2030.
Brazil leads the world in the use of biofuels for transport. They are likely to make up more than 40% of the country's transport fuel mix by 2030, double today's proportion. Raízen's current annual production capacity will be enough to meet nearly 9% of Brazil's current ethanol demand.
At the pump Brazilian motorists are offered the choice of pure ethanol or a blend of petrol (gasoline) and ethanol. Around 90% of the country's new cars can run on either fuel type.
"The Raízen business model, which combines Shell and Cosan assets and has direct access to consumers, is a breakthrough in the biofuels sector,” says Marcos Marinho Lutz, Cosan Chief Executive Officer.
The sugar-cane-to-ethanol process used by Raízen is the most efficient in turning biomass into fuel. Brazilian sugar cane yields 7,000 litres of ethanol per hectare of cane compared to, for example, 3,800 litres for a hectare of corn in the USA and 2,500 litres for a hectare of wheat in Europe, according to Unica, the Brazilian sugar-cane industry association.
"Sugar cane is the most efficient plant we know in converting sunlight into energy," says Professor Edgar de Beauclair, of the Crop Production Department São Paulo State University. Better biofuels
Turning sugar cane into ethanol offers a number of environmental benefits over other biofuel production processes. As it grows, sugar cane generally absorbs CO2 at a greater rate than other biofuel crops such as soy.
Ethanol made from Brazilian sugar cane produces around 70% less CO2 than petrol, when the cultivation and production processes are taken into account. Since 2003 the use of ethanol in Brazil has avoided over 103 million tonnes of the CO2 that the petrol it has replaced would have produced, according to Unica.
By-products from turning sugar cane into ethanol are recycled as organic fertiliser. Plant waste, called bagasse, is burned to produce power for the processing mills and surplus energy is supplied to the national grid.
To further improve productivity, Raízen will use its own advanced geographical information system to monitor its land. This allows its scientists to make accurate predictions about crop yields and adjust fertiliser or pest control, for example, to help boost production.
"Brazilian sugar-cane ethanol is one of the most sustainable and lowest-CO2 biofuels available," says Mark Gainsborough, Shell Executive Vice-President Alternative Energies. "We expect the development of advanced biofuels to benefit from Cosan's feedstock and its expertise in large-scale biofuels production. This has the potential to accelerate the future commercial viability of cellulosic ethanol."
The deal includes part of Shell's interest in the firm Iogen, which uses enzymes to break down plant waste into ethanol, as well as Shell's interest in Codexis, developers of "super-enzymes" for the faster conversion of plant waste into transport fuels. Sustainable production
Raízen will work to improve the sustainability of its operations. Sugar cane for ethanol requires little water to be added because Brazil's tropical rainfall provides natural irrigation. In the industrial process Raízen has been introducing a system that recycles up to 90% of water used.
Raízen supports the development of varieties of sugar cane to suit regional climate and resist disease. To protect cane from pests, it breeds and releases natural predators, further reducing the use of chemical pesticides.
As a member of Bonsucro, formerly the Better Sugarcane Initiative, Raízen has joined with other producers, non-governmental organisations and other experts to establish an EU-approved certificate for sustainable sugar-cane production. This covers areas such as human rights and the impact of activities on biodiversity.
Raízen is working towards achieving certification for all ethanol produced by its own operations over the coming years. It also plans to have certified all ethanol produced from suppliers' cane.
Current sugar-cane production in Brazil takes up 8.1 million hectares, around 0.9% of the country's land. Government legislation forbids industries from entering sensitive areas such as rainforests or land needed for other food crops, and from displacing food crops into other sensitive areas. National laws also recognise the rights of indigenous communities and their claims to land ownership. The main sugar-growing areas are hundreds of kilometres from the Amazon rainforest.
Raízen is well advanced in phasing in mechanised harvesting, ahead of requirements due to come into force in the main Brazilian sugar-cane growing state of São Paulo in 2014. It already uses machines on around 64% of its suitable land (with a slope of less than 12%). CO2 emissions can be reduced because it avoids the need to burn the hard straw, a necessary step in manual cutting.
For more information, interview requests or photography, please contact:
Shell Media Relations David Williams +31 70 377 3600
Shell Investor Relations Europe - Gustavo Bursztyn: + 31 70 377 3996 United States - Ken Lawrence: +1 713 241 2069 www.shell.com Cosan Media Relations Daniela Christovão +55 11 3897 9797 www.cosan.com.br
Cautionary Note
The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this press release "Shell", "Shell group" and "Royal Dutch Shell" are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words "we", "us" and "our" are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. ''Subsidiaries'', "Shell subsidiaries" and "Shell companies" as used in this press release refer to companies in which Royal Dutch Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which Shell has significant influence but not control are referred to as "associated companies" or "associates" and companies in which Shell has joint control are referred to as "jointly controlled entities". In this press release, associates and jointly controlled entities are also referred to as "equity-accounted investments". The term "Shell interest" is used for convenience to indicate the direct and/or indirect (for example, through our 24% shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.
This press release contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management's expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as ''anticipate'', ''believe'', ''could'', ''estimate'', ''expect'', ''intend'', ''may'', ''plan'', ''objectives'', ''outlook'', ''probably'', ''project'', ''will'', ''seek'', ''target'', ''risks'', ''goals'', ''should'' and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this press release, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for the Shell's products; (c) currency fluctuations; (d) drilling and production results; (e) reserve estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including potential litigation and regulatory measures as a result of climate changes; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this press release are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional factors that may affect future results are contained in Royal Dutch Shell's 20-F for the year ended 31 December, 2010 (available at www.shell.com/investor and www.sec.gov - opens in new window). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this press release, 2 June 2011. Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this press release. There can be no assurance that dividend payments will match or exceed those set out in this press release in the future, or that they will be made at all.
The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this press release, such as resources and oil in place, that SEC's guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov - opens in new window. You can also obtain these forms from the SEC by calling 1-800-SEC-0330.
Shell Decides to Move Forward With Groundbreaking Floating LNG Shell Announces Final Investment Decision on Prelude Floating LNG Project in Australia
The Hague, May 20 /PRNewswire/ — The Board of Royal Dutch Shell plc (Shell) has taken the final investment decision on the Prelude Floating Liquefied Natural Gas (FLNG) Project in Australia (100% Shell), building the world's first FLNG facility. Moored far out to sea, some 200 kilometres from the nearest land in Australia, the FLNG facility will produce gas from offshore fields, and liquefy it onboard by cooling.
The decision means that Shell is now ready to start detailed design and construction of what will be the world's largest floating offshore facility, in a ship yard in South Korea.
From bow to stern, Shell's FLNG facility will be 488 metres long, and will be the largest floating offshore facility in the world - longer than four soccer fields laid end to end. When fully equipped and with its storage tanks full, it will weigh around 600,000 tonnes - roughly six times as much as the largest aircraft carrier. Some 260,000 tonnes of that weight will consist of steel, around five times more than was used to build the Sydney Harbour Bridge.
"Our innovative FLNG technology will allow us to develop offshore gas fields that otherwise would be too costly to develop," said Malcolm Brinded, Shell's Executive Director, Upstream International. "Our decision to go ahead with this project is a true breakthrough for the LNG industry, giving it a significant boost to help meet the world's growing demand for the cleanest-burning fossil fuel."
Brinded continued "FLNG technology is an exciting innovation, complementary to onshore LNG, which can help accelerate the development of gas resources".
The facility has been designed to withstand the severest cyclones - those of Category 5. Ocean-going LNG carriers will offload liquefied gas, chilled to minus162 Celsius and shrunk in volume by 600 times, and other products, directly from the facility out at sea for delivery to markets worldwide. Until now, the liquefaction of offshore gas has always involved piping the gas to a land-based plant.
Shell has progressed the Prelude FLNG project at a rapid pace, with first production of LNG expected some ten years after the gas was discovered.
The FLNG facility will tap around 3 trillion cubic feet equivalent of resources contained in the Prelude gas field. Shell discovered the Prelude gas field in 2007.
Some 110,000 barrels of oil equivalent per day of expected production from Prelude should underpin at least 5.3 million tonnes per annum (mtpa) of liquids, comprising 3.6 mtpa of LNG, 1.3 mtpa of condensate and 0.4 mtpa of liquefied petroleum gas. The FLNG facility will stay permanently moored at the Prelude gas field for 25 years, and in later development phases should produce from other fields in the area where Shell has an interest.
Ann Pickard, Country Chair of Shell in Australia said "this will be a game changer for the energy industry. We will be deploying this revolutionary technology first in Australian waters, where it will add another dimension to Australia's already vibrant gas industry."
Brinded added "beyond this, our ambition is to develop more FLNG projects globally. Our design can accommodate a range of gas fields, and our strategic partnership with Technip and Samsung should enable us to apply it progressively faster for future projects. We see opportunities around the world to work on other FLNG projects with governments, energy companies and customers."
Shell's decision to make FLNG a reality culminates more than a decade of research and development. It builds on the company's extensive know-how in offshore production, gas liquefaction, LNG shipping, and delivering major projects that integrate the gas value chain-from wellhead to burner.
The Prelude FLNG project will be the first Australian upstream project in which Shell is the operator. Australia is one of Shell's key growth provinces, and Shell's upstream investment in Australia should reach some $30 billion over the next five years, including the Prelude and Gorgon projects, and on-going exploration and feasibility studies in the country.
Prelude FLNG is part of Shell's industry-leading portfolio of medium term growth options, where the company has around 30 new upstream projects under study world-wide, to support long term profitable growth. Notes to Editors
Shell is a global, integrated energy company with operations in more than 90 countries and territories, with businesses including: oil and gas exploration and production; refineries and chemical plants; processing and marketing of liquefied natural gas (LNG) and gas-to-liquid (GTL) products; marketing and shipping of oil products and chemicals; and renewable energy sources, such as biofuels.
Gas resources are found all over the world in remote offshore accumulations. In Australian waters alone there is an estimated 140 trillion cubic feet of such "stranded" gas, according to a 2008 report by the Commonwealth Scientific and Industrial Research Organisation (http://www.solve.csiro.au/0608/article5.htm). Shell FLNG technology will make it feasible to develop such resources, since it reduces both the cost and environmental footprint of their development. Having the gas-processing and gas-liquefaction facility located at the site of an offshore field removes the need for: gas-compression platforms; long subsea pipelines to shore; near-shore works, such as dredging and jetty construction; and onshore construction, including roads, storage yards and accommodation facilities. Another plus is that FLNG can accelerate LNG developments. This is because an FLNG vessel can be ordered at an earlier stage of appraisal of a new gas field, with less guarantee of production longevity than needed to underpin an onshore greenfield investment; if and when the gas resources in the first field are exhausted, the FLNG can be redeployed to another field.
Shell is the operator and 100% equity holder of the WA-371-P permit in the Browse Basin, where the Prelude field is located. The field is approximately 475 kilometres north-northeast of Broome, Western Australia, and over 200 kilometres from the nearest point on the mainland. Shell plans to have initially seven subsea wells at the Prelude field. From these wells, gas will travel through flexible pipes to the FLNG facility.
Shell has been doing business in Australia for 110 years, including participation in major LNG projects such as the North West Shelf and Gorgon. For more information, interview requests or photography, please contact:
The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this press release "Shell", "Shell group" and "Royal Dutch Shell" are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words "we", "us" and "our" are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. ''Subsidiaries'', "Shell subsidiaries" and "Shell companies" as used in this press release refer to companies in which Royal Dutch Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which Shell has significant influence but not control are referred to as "associated companies" or "associates" and companies in which Shell has joint control are referred to as "jointly controlled entities". In this press release, associates and jointly controlled entities are also referred to as "equity-accounted investments". The term "Shell interest" is used for convenience to indicate the direct and/or indirect (for example, through our 24% shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.
This press release contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management's expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as ''anticipate'', ''believe'', ''could'', ''estimate'', ''expect'', ''intend'', ''may'', ''plan'', ''objectives'', ''outlook'', ''probably'', ''project'', ''will'', ''seek'', ''target'', ''risks'', ''goals'', ''should'' and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this press release, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell's products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this press release are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional factors that may affect future results are contained in Royal Dutch Shell's 20-F for the year ended December 31, 2010 (available at www.shell.com/investor and www.sec.gov ). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this press release, 20 May, 2011. Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this press release.
We may have used certain terms in this press release, such as resources, that the United States Securities and Exchange Commission (SEC) guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov. You can also obtain these forms from the SEC by calling 1-800-SEC-0330.
The Zacks Analyst Blog Highlights: Chevron, ExxonMobil, Royal Dutch Shell, ConocoPhillips and BP
PR Newswire
CHICAGO, May 2, 2011
CHICAGO, May 2, 2011 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Chevron Corp. (NYSE: CVX), ExxonMobil Corp. (NYSE: XOM), Royal Dutch Shell plc (NYSE: RDS.A), ConocoPhillips (NYSE: COP) and BP plc (NYSE: BP).
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Here are highlights from Friday's Analyst Blog:
Chevron Profits Soar Past Estimates
U.S.energy giant Chevron Corp. (NYSE: CVX) reported a jump in its first-quarter 2011 profits, benefiting from higher oil prices and stronger refining margins.
Earnings per share (excluding adjustments for foreign-currency effects) came in at $3.17, above the Zacks Consensus Estimate of $2.99 and the year-ago adjusted profit of $2.37.
Following ExxonMobil Corp. (NYSE: XOM) and Royal Dutch Shell plc (NYSE: RDS.A), Chevron stepped up as the third member of 'Big Oil' to post solid results. The other two constituents of the exclusive group – ConocoPhillips (NYSE: COP) and BP plc NYSE: (BP) – have reported disappointing quarterly profits.
Quarterly revenue rose 25.2% year-over-year (from $48,179.0 million to $60,341.0 million) and was 10.9% above our projection.
Segmental Performance
Upstream: Chevron's total production of crude oil and natural gas decreased marginally (by 0.8%) from the year-earlier level to 2,760 thousand oil-equivalent barrels per day (MBOE/d), as volume gains in Brazil, Nigeria, Thailand and Canada were more than offset by normal field declines, the effect of higher prices on cost-recovery volumes and other contractual provisions, as well as downtime associated with weather and maintenance issues.
U.S. output dipped 5.5% year-over-year though Chevron's international operations (accounting for 75% of the total) experienced a modest 0.8% rise in volumes. Gains on the overseas production front were supported by higher realized liquids prices, resulting in a 26.5% year-over-year rise in upstream earnings to $5,977.0 million.
Despite the slight dip in Chevron's quarterly volumes, we believe its production outlook remains one of the most robust in its peer group, with a number of major deepwater projects scheduled to come online during the next few years. Major start-ups during the last few months include the Tahiti and Perdido in the Gulf of Mexico, Frade offshore Brazil and Tombua-Landana in Angola.
Chevron continues to progress its major capital projects that include deepwater developments in the Gulf of Mexico (GoM) and multiple liquefied natural gas (LNG) mega-projects in Angola and Australia. Importantly, during the quarter, Chevron got the green light for conducting the first 'completely new exploration' in the GoM. (i.e. tapping a reservoir from which oil or gas has never been produced) since BP's oil rig disaster in April last year.
Downstream: Chevron's downstream segment's earnings soared to $622 million during the quarter, as against just $196 million in the previous-year period. The improvement can be attributed to improved refined products margins and higher earnings from chemical operations (primarily from the 50%-owned Chevron Phillips Chemical Company LLC), partially negated by lower refined product sales.
Capital Expenditure, Balance Sheet & Share Repurchases
The second-largest U.S. oil company by market value after ExxonMobil spent $5,046.0 million in capital expenditures during the quarter. Approximately 92% of the total outlays pertained to upstream projects. As of March 31, 2011, the company had $13,149.0 million in cash and total debt of $11,575 million, with a debt-to-total capitalization ratio of about 9.5%. As part of the stock repurchase program announced in 2010, Chevron repurchased $750 million worth of shares in the March quarter.
Dividend Hiked
Recently, the San Ramon, California-based company announced an 8.3% increase in its quarterly dividend to 78 cents per share, or $3.12 per share annualized. The dividend is payable on June 10 to shareholders of record on May 19, 2011.
Our Recommendation
Chevron is one of the largest integrated energy companies in the world and has an impressive business model. Its current oil and gas development project pipeline is among the best in the industry, boasting large, multiyear projects. Additionally, Chevron possesses one of the healthiest balance sheets among peers, which helps it to capitalize on investment opportunities with the option to make strategic acquisitions.
However, due to its integrated nature, Chevron is particularly susceptible to the downside risk from continued weakness in the global economy. We are also concerned by the company's high level of capital spending, which may result in reduced returns going forward. As such, we see the stock performing in line with the broader market and maintain our long-term Neutral recommendation, supported by a Zacks #3 Rank (short-term Hold rating).
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