By Steve Gelsi
Royal Dutch Shell weighed on energy stocks on Tuesday after the
oil major said it fell short of replacing its reserves as it moved
to prepare for a steep slide in oil prices.
Energy stocks fell across the board, pulled down by weakness in
the broad market and slack oil prices.
The Amex Oil Index (XOI) dropped 1.4% to 825. Component Royal
Dutch Shell (RDSA) dropped 3% to $44.32 despite a move to
distribute $10 billion in dividends this year.
Sunoco (SUN) fell more than 4% to $26.94.
The Amex Natural Gas Index (XNG) dropped 0.2% to 334. Component
Southwestern (SWN) subtracted 2% to trade at $28.14.
The Philadelphia Oil Service Index (OSXX) dipped 1% to 122.
Component Cameron International (CAM) fell 2.4% to $20.62.
Crude oil prices dipped 7 cents to $47.28. The Dow Jones
Industrial Average dropped about 20 points to 7,197.
Shell (RDSA), in a strategy update, said it replaced 95% of its
reserves in 2008 by its own methodology.
Even when including oil sands and year-end price effects,
Shell's reserve replacement was 97%, falling below the 100% mark
needed to maintain future production and a figure below that of
rivals like Exxon Mobil (XOM) and BP (BP).
Still, Shell reiterated that it's aiming for 2% to 3% annual
production growth through 2012. BP (BP), by contrast, has a 1% to
2% annual production growth target.
Royal Dutch Shell isn't looking to spend much on new investments
for wind and solar energy because of the poor investment returns,
according to Linda Cook, executive director for gas and power,
Shell Trading, global solutions and technology. During a conference
call with the media, she said Shell's alternative energy focus will
be on biofuel.
Among energy stocks in the spotlight, Basic Energy Services Inc.
(BAS) fell 2.6% to $6.10. The company said February rig count
remained unchanged at 414, but rig utilization rates dropped to
46%, down from 75% in the year-ago period. January's rig
utilization rate was 49%. "Given current commodity prices and
uncertainty in the financial markets, we don't expect our
customers' spending on services to support an increase in
utilization rates in any of our segments in the near term," the
Midland, Texas, company said.
Canadian Solar (CSIQ) swung to a fourth-quarter loss of $50.6
million, or $1.42 a share, from net income of $5.99 million, or 21
cents a share, in the year-ago period. Operating income dipped to
$5.5 million from $5.99 million. Revenue at the Toronto-based firm
fell to $73 million from $127.5 million. Shares fell 12% to
$3.41.
Cellulosic ethanol start-up Verenium Corp. (VRNM) said its Form
10-K filed with the Securities and Exchange Commission included an
audit opinion that contained a going concern qualification. Shares
dropped 5 cents to 34 cents.
-Steve Gelsi; 415-439-6400; AskNewswires@dowjones.com
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