Shell downgrades output forecast

Sep 19, 2001 02:00 AM

Shell lowered its growth expectation in its upstream production business to 3 % a year up to 2005 from 5 %. Shell said the reduction was due to "slower than anticipated access to major sources of reserves," adding that "some projects are taking longer to realize than expected."
"Some more mature fields," it said, "are declining faster than before." Shell said production in 2001 was likely to meet the target of 3.8 mm bpd of oil equivalent at an average Brent price of $ 14 a barrel. 2002 production is expected to be similar. Shell's previous 5 % forecast for an average volume growth for gas and oil volumes ran from 1999 through 2005.

Shell said it is currently developing projects which it expects will yield 1.2 mm bpd by the end of 2005. The group also said it expects future capital investment in the upstream business to be "in the range of $ 7 bn to $ 8 bn a year." Despite lowering its output target, Shell said it is "confident" of continuing to deliver a 15 % return on average capital employed, a reference condition for the group.
Philip Watts, chairman of the committee of managing directors of the group, said he was confident Shell will continue to deliver "leading returns" to shareholders, despite the company downgrading its output forecast.

Source: Dow Jones via Energy24
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