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Shell going well

2 May 2013 By Kevin Allison

When a chief executive unexpectedly leaves to spend more time with his family, it’s usually a cue to start a post-mortem into a failed tenure. Shell looks like an exception. Actually, it is shame Peter Voser is leaving. The Anglo-Dutch oil major could do worse than hope his successor mimics his ways.

Voser has been a steadying influence at Shell. He joined as CFO in 2004 in the wake of a reserves accounting scandal that cost Philip Watts, the one-time chairman, his job. Voser became CEO in 2009. The Swiss national can’t claim all the credit for Shell’s revival. He benefited from a rebuild programme initiated by Jeroen van der Veer, his predecessor, and from elevated oil prices.

Yet, Voser should be thanked for attacking Shell’s unwieldy bureaucracy. He also deserves credit for keeping Shell a bit boring – striking a sensible balance between oil and gas while avoiding the missteps that have dogged some of its biggest competitors.

Unlike BP, Shell’s safety record is passable despite pushing into technically challenging frontiers like deep-water drilling and liquefied natural gas. Unlike Exxon, Shell took a measured approach to building up its presence in U.S. shale gas, rather than riling investors with the likes of a huge $31 billion bet on XTO Energy. The results have been pleasing for shareholders: since 2009, only Chevron has beaten Shell’s total investment return of 54 percent among the global super-majors.

The board probably wishes it could convince Voser to stay. At 54, he is hardly an old man. But his timing is understandable, and he will remain in post until next year. First-quarter results, unveiled alongside news of the departure, were the first to show three big new projects running at full clip. They featured healthy cash flows and dividend growth.

That’s not to say Voser will leave his successor an easy job. The energy business is getting harder thanks to softer crude prices, modest production gains and high project costs. Meanwhile, Shell’s shares, which used to trade at a discount to peers, already reflect a quality premium, trading on 5.2 times forward cash flows, versus 4.6 times for other oil majors. At some point that gap may close.

Shareholders who have benefitted from the outgoing boss’s steady approach should hope for similar qualities in his successor. There is still work to do.


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