Shell's balance sheet, renewables strategy to be drawn into focus on Tuesday

 
Jessica Morris
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Shell Holds Annual General Meeting In London
Shell recently participated in a bid for two wind farms (Source: Getty)

Royal Dutch Shell's balance sheet and renewables policy could be drawn into focus when the oil major holds an investment day on Tuesday.

The FTSE 100-listed oil major — which bought BG in a £35bn deal — recently revealed profits slumped 83 per cent in the first three months of 2016. This added to pressure on chief executive, Ben van Beurden, to justify the deal.

It comes as low oil prices reportedly make it harder to find interested buyers for Shell's $30bn of assets up for grabs. The asset sales are part of a wider strategy, which includes spending cuts, to meet the costs of acquiring its smaller rival.

Read more: Is the BG-Shell deal offering value to investors?

Barclays recently wrote that the firm could cut $3bn from the $24bn it spent on exploration last year, and further reduce its cost base.

"We see a much larger opportunity available with those costs still 145 per cent higher than those recorded in 2005, when Brent also averaged in the $50s," they said.

Read more: Total makes near €1bn wager on renewable energy with bid for battery maker Saft

Shell is also expected to reveal the establishment of a separate division, New Energies, to invest in renewable and low-carbon power.

The firm's existing hydrogen, biofuels and electrical activities but will be used as a base for a new drive into wind power, the Guardian reported. Shell participated in a bid to build two wind farms off the coast of the Netherlands last month.

Shell declined to comment.

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