Citi says all not well at Shell, reiterates 'sell' rating

One of the main messages from a dinner with Shell's management was that trading remains difficult in the third quarter, Citi's Alastair Syme said. Syme kept his 'sell' recommendation and target price of £11.80 on the FTSE 100 company's shares.

Liquefied natural gas prices and refining margins are very low and Shell has had problems managing full utilisation of upstream assets because of Covid-19 and weather related downtime, Syme said. Shell's shares have more than halved in 2020 and at £10.04 at 15:09 BST are not far above the low they sank to in March as oil prices plunged.

Shell has promised to respond with "Project Reshape' which is expected in early 2021 and is billed as a fundamental rethink about how to operate during the transition to cleaner energy, Citi said. Shell acknowledges that many new energy companies are smaller, faster and more digital.

"The share price chart of RDS shows you that all is not well," Syme wrote in a note to clients. "We did not get a sense of how Project Reshape will be measured, ie what KPIs [key performance indicators] will be given to the market."