The Rising Influence of Rising Affluence

[DewDiligence]

[Steve Kolpits] certainly paints a grim picture for Shell Oil.

Is that crystal clear? The one explicitly derogatory comment about Shell was that, in 2013, the company “borrowed money to pay the dividend” — i.e. that the dividend wasn’t covered by 2013 free cash flow after cap-ex. However, according to Shell's management, 2013 was a one-off situation that won't be repeated.

Is there an alternative explanation for Shell’s (and other Big Oil’s) divestitures other than the thesis posited by Mr. Kolpits that Big Oil companies is using a discredited forecasting model for oil? In the case of Shell, perhaps the divestitures will genuinely benefit shareholders by leaving a smaller, more focused company with a better return on capital, as management contends.