What's going on?
Shell’s quarterly results missed expectations on Thursday, so the oil giant will do whatever it has to do to prove its green credentials and win investors back.
What does this mean?
You’d think that Shell would be raking it in as energy prices soar, but Hurricane Ida had other plans: the storm dented the energy giant’s oil and gas production in the Gulf of Mexico in late August, and sent its profit down by a higher-than-expected 25% last quarter versus the one before. So you can bet Shell’s doing everything it can to keep investors on side. And since they’re increasingly pushing the company to turn away from fossil fuels, that’s as good a place as any to start: it just sold its business in the Permian Basin – the biggest oil production site in America – for almost $10 billion, and announced on Thursday it’d be cutting its 2016 emissions level in half by 2030 (tweet this).
Why should I care?
The bigger picture: Oil and water don’t mix.
Shell’s been using the profit it makes from its oil and gas business to fund its renewable energy segment, but legendary activist investor Dan Loeb reckons the two opposing businesses are actually dragging down the overall value of the company. And he’s putting his money where his mouth is: Loeb’s firm, Third Point, has reportedly taken a $750 million stake in Shell, and he’s using this newfound sway to urge Shell to split its business in half.
Zooming out: Ford’s not doing Shell any favors.
Shell makes a big chunk of its revenue from fuel for vehicles, but it can’t count on that income forever as electric vehicles (EVs) gain in popularity. And that’s only going to keep accelerating if Ford’s latest announcement is anything to go by: the carmaker said this week that it’ll be spending $7 billion on four new plants that are forecast to produce 1 million EVs. It’s all part of a bid to make 40% of all the cars it sells electric by 2030.