A week after Shell (SHEL) delivered 2021 results that saw its earnings climb handsomely, chief executive Ben van Beurden sold £3.9mn in shares.
He benefited from a recent hike in the company’s share price, which is up 15 per cent this year alone. The company has also just consolidated its structure, moving its registered tax home from the Netherlands to the UK.
A spokesperson for Shell declined to comment on the sale, calling it a “private matter”. The company’s projects and technology director, Harry Brekelmans, also sold €2.9mn (£2.5mn) in shares last week.
Shell's short-term prospects are strong as oil and gas prices remain high. A recent note from HSBC forecasts cash flow from operations to remain at the same level as last year, around $50bn (£37bn), albeit with higher capital spending of between $23bn and $27bn a year.
Analysts Gordon Gray and Kim Fustier suggested Shell’s share price may be nearing a high however. “While the near-term upside in Shell's share price may be somewhat limited as a result of [oil markets stabilising], we think longer-term upside could be more substantial as the company builds credibility as a key enabler of the energy transition,” they said.
There is some debate in the sector over the oil price’s trajectory. Last week, BP (BP) said it saw the market coming into balance and therefore expects a drop in prices, but new data from the International Energy Agency (IEA) increased 2022 demand expectations by 800,000 barrels of oil per day (bopd), which combined with an earlier increase of 200,000bopd, is about 1 per cent higher overall global demand. There are also questions about how much supply Opec-plus countries can bring on.
Our sell call on Shell in mid-2020 at 1,234p was not quite its 12-month low, but was certainly a long way from its current price of over 2,000p. There are still enough long-term questions about how the company will balance its heavy spending on green initiatives with the need to keep investing in production. Sell.
Last IC View: Sell, 1,955p, 3 Feb 2022
