Royal Dutch Shell (NYSE:RDS) used a recent analyst meeting to review the company's operational achievements for 2010 and its extensive upstream portfolio of oil and gas projects. The company also set an ambitious goal for production growth through 2014.

IN PICTURES: Learn To Invest In 10 Steps

2010 Summary
Royal Dutch Shell earned $20.1 billion in 2010, up 61% from 2009. Like many of its peers, the company earned most of these profits in the upstream segment. The company reported production of 3.314 million barrels of oil equivalent (BOE) per day in 2010, a 5% increase over 2009.

Royal Dutch Shell brought five upstream projects on line in 2010, including the Perdido development in the deepwater Gulf of Mexico. This development will eventually produce from three offshore oil and gas fields and ramp up to a peak capacity of 100,000 BOE per day. BP (NYSE:BP) and Chevron (NYSE:CVX) also have an ownership interest in the Perdido development.

Capital Expenditures
Royal Dutch Shell expects capital expenditures to range between $25 billion and $27 billion a year through 2014. This estimate is line with the company's previous guidance and reflects the large amounts of capital needed to develop oil and gas resources.

Production Growth

Royal Dutch Shell has twenty upstream projects currently under construction and estimates that these developments will add 800,000 BOE per day of production, helping the company reach its production goal of 3.5 million BOE per day by 2012. For 2014, Royal Dutch Shell has set a target production goal of 3.7 million BOE per day, representing 12% growth over 2010.

Exploration and Development
Royal Dutch Shell is on track to start up production from the Pearl Gas to Liquids (GTL) plant in 2011. This project is located in Qatar and at its peak will produce 360,000 BOE per day of gas to liquids products and natural gas liquids.

Royal Dutch Shell also plans to drill 25 exploration wells in 2011 across its entire portfolio, including wells in Brazil, China and North America. The company reported a recent success on an exploratory well located offshore Brunei, and plans further appraisal wells here.

Asia has become a popular location for companies to look for oil and gas reserves. In January 2011, Exxon Mobil (NYSE:XOM) announced that it would partner with the Malaysian National Oil Company to invest $3.2 billion in that country. In February 2011, BP agreed to pay $7.2 billion for a 30% stake in 23 separate oil and gas production sharing contracts held by Reliance Industries in India.

The Bottom Line
Royal Dutch Shell increased net income and production in 2010, and has built up a large set of oil and gas projects. The company will aggressively develop these properties over the next few years to meet its production growth goals. (For related reading, take a look at What Determines Oil Prices.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Stock Analysis

    The Biggest Oil Producers in Asia

    Learn which Asian countries deliver the most crude oil to market, and discover what companies are the biggest producers in each country.
  2. Stock Analysis

    The 5 Biggest Russian Oil Companies

    Discover the top Russian oil companies by production volume and find out more about their domestic and international business operations.
  3. Mutual Funds & ETFs

    What Exactly Are Arbitrage Mutual Funds?

    Learn about arbitrage funds and how this type of investment generates profits by taking advantage of price differentials between the cash and futures markets.
  4. Investing News

    Ferrari’s IPO: Ready to Roll or Poor Timing?

    Will Ferrari's shares move fast off the line only to sputter later?
  5. Stock Analysis

    3 Solar Stocks to Add to Your Portfolio

    Understand the growth and challenges of the renewable energy market and its success in 2015. Learn about the top three energy stocks to add to a portfolio.
  6. Investing News

    Glencore Shares Surge in Hong Kong

    Shares of Glencore International, a leading multinational commodities and mining company, jumped by around 15% on London Stock Exchange, after the shares had gained about 71% earlier on the Hong ...
  7. Stock Analysis

    The 5 Best Buy-and-Hold Energy Stocks

    Understand why energy companies' stock are volatile when oil prices are volatile. Learn about the top five energy companies to buy and hold.
  8. Investing

    Have Commodities Bottomed?

    Commodity prices have been heading lower for more than four years, being the worst performing asset class of 2015 with more losses in cyclical commodities.
  9. Stock Analysis

    5 Cheap Dividend Stocks for a Bear Market

    Here are five stocks that pay safe dividends and should be at least somewhat resilient to a bear market.
  10. Investing

    How to Win More by Losing Less in Today’s Markets

    The further you fall, the harder it is to climb back up. It’s a universal truth that is painfully apparent in the investing world.
  1. Can working capital be too high?

    A company's working capital ratio can be too high in the sense that an excessively high ratio is generally considered an ... Read Full Answer >>
  2. How do I use discounted cash flow (DCF) to value stock?

    Discounted cash flow (DCF) analysis can be a very helpful tool for analysts and investors in equity valuation. It provides ... Read Full Answer >>
  3. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  4. What is the formula for calculating compound annual growth rate (CAGR) in Excel?

    The compound annual growth rate, or CAGR for short, measures the return on an investment over a certain period of time. Below ... Read Full Answer >>
  5. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  6. When does the fixed charge coverage ratio suggest that a company should stop borrowing ...

    Since the fixed charge coverage ratio indicates the number of times a company is capable of making its fixed charge payments ... Read Full Answer >>

You May Also Like

Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!