Expert comment on shareholders putting Shell under pressure to reduce costs

Christian Stadler, of is a Professor of Strategic Management, researched Shell for 15 years and featured the company in his book Enduring Success. Professor Christian Stadler said: “Companies which succeed in the long run are financially conservative. In a low-price environment the obvious conclusion is that costs need to be cut. Shell has a long history of getting that right and I don’t think that Shell did this with the BG acquisition. The logic of the deal to increase reserves and in particular its position in gas remains valid.”It is not entirely surprising that shareholders are calling for costs and capex to be cut. In principle that makes sense as Shell’s rivals have substantially lower capex, for example Exxon’s is $10 billion lower.”At the same time we need to bear in mind that most analysts and shareholders think short-term, while, particularly for the most challenging projects, oil companies have to think in decades. Even if the next rise in oil prices is five years away, cutting promising projects now will hurt the company then. In essence that means some reduction of capex is sensible as long as it is done diligently.”