Activist Investor Third Point Calls for Breakup of Shell

Ms. Uhl conceded that “we haven’t done a good enough job” in explaining Shell’s strategy for shifting to cleaner energy, which involves using the cash from oil and gas to fund new greener businesses.

Shell executives argue that as a large, well-capitalized organization with more than a century of experience delivering various forms of energy, Shell is well-placed to make multibillion-dollar investments in areas like carbon capture and storage and hydrogen that will be needed in the shift to cleaner energy.

“A very significant part of this energy transition is going to be funded by the legacy businesses that we still have,” said Ben van Beurden, Shell’s chief executive on the call. “If you want to exclude us from it, I don’t think it will go as fast as it would otherwise go,” he added.

Shell has also been under pressure to shed fossil fuel investments after a Dutch court ordered the company in May to cut greenhouse-gas emissions 45 percent by 2030 compared with 2019 levels. Shell is appealing the ruling. The company said Thursday that it would reduce emissions from operations by 50 percent by 2030, regardless of whether it won the appeal. Shell recently sold its interests in the Permian region, the prime shale drilling area in the United States, for $9.5 billion.

Shell may resist the idea of a breakup, but pressure from Third Point or others is likely to have an impact, analysts say. Most of the big European oil companies are investing in clean energy like wind and solar, as well as related businesses like electric vehicle charging, but are not being given credit by the markets for doing so, they say.

Analysts at Bernstein, a research firm, wrote that they did not think a “a full split” at Shell was imminent, but that the nudge from Third Point will “get management back on the front foot triggering their next shareholder-friendly step.”

In other words, Mr. van Beurden and his colleagues, who have laid out one of the more detailed strategies for shifting to lower carbon businesses among the large oil companies, may be prompted to do more.

Article source: https://www.nytimes.com/2021/10/28/business/third-point-shell-breakup.html