Royal Dutch Shell (NYSE: RDS-A) (NYSE: RDS-B) is arguably the most ambitious among Big Oil companies. This year should go down as one of the most important for the company in terms of growth and expansion. The company’s relentless pursuit of growth should catch the attention of rivals and investors alike.
The first six months of the year saw three successful start ups which has the potential to add up to 400,000 barrels of oil equivalent per day (Boepd). That’s a good 13% increase in production from current levels. Last week’s investor day in New York just confirmed that the company’s plans are engraved in rock.
Canadian quest
Canada’s Athabasca Oil Sands project, jointly operated with Chevron (NYSE: CVX) and Marathon Oil (NYSE: MRO), is on course for a further 100,000 Boepd ramp up from the current capacity of 155,000 barrels per day. This is exactly what I’m looking for. With major successful projects undergoing expansion, investors should see merit in management’s strategy to exploit available resources to the fullest.
Why Asia matters
However, that’s not all. Shell has realized pretty early on that its growth for the next decade hinges on the developing economies of Asia. The continent’s demand for liquefied natural gas has been growing by leaps and bounds. And that’s why the company’s strategic entry into Qatar’s natural gas reserves is worth applauding. The appropriately named Qatargas 4 project aims to cater to China’s long-term demand for Qatari LNG, as well as help Dubai meet its power requirements.
India has been a customer since February of this year. The vast potential of the world’s second fastest growing economy as a long-term customer shouldn’t be dismissed.
Shell’s management has made sure that none of its Asian projects are isolated in nature. The company’s $19 billion gas-to-liquids plant in Qatar is estimated to add a substantial 8% to current production through natural gas liquids. However, what many might miss is the company’s pursuit to take advantage of the price difference between natural gas and natural gas liquids.
With total spending on these projects around $30 billion, I believe management has a clear idea how drive up the company’s financial performance in the coming days.
Additionally, a dividend yield of 5.2% -- the highest among Big Oil companies -- should have investors salivating. Clearly, management understands the need to retain investors at this crucial juncture.
Foolish bottom line
I won’t be too surprised if Shell’s steady production growth takes it closer to market leader ExxonMobil (NYSE: XOM). No other Big Oil company can currently match Shell’s global presence. Gaining and strengthening a foothold in a foreign territory is an advantage which can’t be quantified, but holds huge growth potential. Foolish investors watch out.
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