The O&G Industry Needs a Strong Shell
It wasn’t that long ago that ExxonMobil had fallen far from grace and a CEO at another major oil company had said to a well-respected energy analyst & friend of mine (I am paraphrasing), “The O&G industry needs a strong ExxonMobil.”
You don’t often hear that said among competitors.
But these high-flying execs know that in the grand scheme of things the western oil companies are now less than 10% of global oil production.
A place they haven’t been since 1912 and a far cry from their post-WW2 dominance.
3 years later I am carrying that train of thought one step further and going across the pond to say “The O&G industry needs a strong Shell.”
In this post, I will touch on:
A chart-packed financial history of the Royal Dutch Shell Group.
How Shell lost its way in the 2000s
Despite prior leadership’s attempt to change the company, Shell is still investing in oil & gas and the energy world needs a strong Shell
Let’s Begin.
A chart-packed history of the Royal Dutch Shell Group
If you know the history of Shell (or as I still call her Royal Dutch Shell Group or RDS for short) they were truly the first international oil company.
They were the first to go international when Henri Deterding’s Royal Dutch Petroleum discovered oil in what is now Indonesia.
They were the first to gain a foothold in pre-revolutionary Russia.
They were one of the first to develop Mexico and after that Venezuela.
Standard Oil didn’t do any of that!
Marcus Samuel’s Shell Transport & Trading would invent and build the world’s first tanker that could transport Russian crude through the Suez Canal (The Murex) thus giving Shell T&T access to Russian crude to feed the European and Asian markets.
Samuel was an outsider to London’s elite and he would use Shell T&T’s success to climb the social & political ladders.
Deterding was the businessman. The man you want running your company. Cunning, savvy, and daring enough to take on Standard Oil.
So much so, that he decided to take a price war to Rockefeller’s home soil in N. America - hence the birth of Shell USA.
His only downfall was he was a bit of a Nazi sympathizer. Oops…
In 1909, Deterding gained control of the merged companies. His company, Royal Dutch, held 60% ownership of the RDS Group while Samuel's T&T shareholders held 40%.
Royal Dutch Petroleum & Shell T&T traded separately for decades until the year 2000 when they became class A shares (RDS.A), representing the Royal Dutch shareholders, and class B shares (RDS.B) representing Shell T&T.
Finally, in 2020, all shares were consolidated into one under the symbol SHEL. It only took 114 years to simplify things, but hey…they finally got it done!
This sort of multi-share listing is the reasoning behind the hardest chart I have ever had the pleasure of building. RDS price history since 1891.
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