Barclays names Shell as its top pick for 2014

Barclays has given Royal Dutch Shell’s new chief executive Ben Van Beurden the ultimate vote of confidence by declaring today that the oil major is its top pick for 2014.

Low-profile internal candidate Van Beurden replaced Peter Voser at the start of the year, surprising some investors who had expected finance chief Simon Henry to take the top role.

“We expect an increased focus on capital discipline, improved corporate returns and a more shareholder friendly strategy,” said the Barclays research.

“The removal of production targets and poor results in North America during 2013 make it is easy to forget that Shell still starts from a stronger free cash flow position than the majority of the peer group.”

Declining profits at refineries, increased spending and disruption in Nigeria all hit Shell hard last year. It is planning to speed up its divestment plan to offset its spending in 2014.

The company has also struggled to turn around its upstream business in the Americas, which made losses last year despite representing just over a quarter of the group’s capital expenditure.

“Addressing this underperformance should, in our view, be a priority for the new chief executive,” said Barclays.

“Fixing the North American business will take time and further investment, but some improvement will come from existing plans and projects – notably increasing Gulf of Mexico production.”

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