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TimesOnline: Shell ends week on positive note


From Agencies

February 13, 2004


Shell received some welcome good news today when market analysts Sanford Bernstein upgraded its rating on the group to "outperform" in a note which argued that the worst is now over for the group after its shock oil reserve cut in January.


The upgrade also follows the group’s warning last week that oil and gas production will be flat this year and fall in 2005, as it unveiled fourth-quarter earnings battered by $1.02 billion of writedowns on the value of businesses it has sold.


In a note to clients, Sanford analyst Neil McMahon said: "The majority of our thesis on Shell has played out, with the earnings conference call last week guiding to flat production in 2004 and production decline in 2005."


He was also upbeat given rising commodity prices. The industry is being penalised for rising costs, low growth and deteriorating reserves, yet the market is largely ignoring that all these factors will support a moderate-to-high oil price in the future, he said.


In fact, he said Shell could stage a ChevronTexaco-style turnaround this year.


"We believe Shell is in a similar situation to that of ChevronTexaco at the end of 2002. Following ChevronTexaco’s model of significant cost reduction, investment in exploration and restructuring of core businesses will go some way to restoring investor confidence," he said.


At 10.03am, Shell was up 1.75p at 351.75p,,8903-1000237,00.html

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