Shell Replaces Finance Chief Simon Henry With Jessica Uhlby , , and
Henry helped steer Shell’s $54 billion takeover of BG Group
Move is ‘a little surprising,’ say analysts at Jefferies
Royal Dutch Shell Plc said Chief Financial Officer Simon Henry will leave the company after more than seven years in the role, and will be succeeded by Jessica Uhl.
Henry will remain on the board as CFO until March 9, The Hague-based Shell said in a statement Thursday, without giving a reason for his departure. The 55-year-old, who has been with the oil giant for more than three decades and helped to push through its $54 billion acquisition of BG Group Plc earlier this year, will assist with the job transition until the end of June.
“While this news is a little surprising, it is not a complete shock to us as Shell continues to evolve post-BG,” Jefferies analysts Jason Gammel and Marc Kofler said in a note. “We would not expect this news to result in a material deviation from Shell’s existing financial framework and strategic goals.”
While Shell’s most recent earnings showed signs the BG deal is starting to pay off as oil and gas production surges, the biggest takeover in the company’s history also saddled it with a weakened balance sheet after two years of low oil prices. As debt piled up, Henry and Chief Executive Officer Ben Van Beurden have had to take on more debt to maintain dividend payouts, resulting in credit-rating downgrades.
Shell’s gearing -- a measure of indebtedness -- was 29 percent at the end of the third quarter, compared with 12 percent in the first quarter of 2015. Henry warned investors earlier this year that gearing could surpass the 30 percent threshold, a level that in the past has started to worry rating companies.
“Seven years is a respectable period as CFO for a group such as Shell,” Alex Brooks, an analyst at Canaccord Genuity Ltd., said by e-mail. “I don’t think that Ms Uhl is a known quantity to many in the capital markets community.”
Uhl, a U.S. citizen, joined Shell in 2004 and has held finance leadership roles in businesses including Upstream, Integrated Gas and Downstream. She is currently executive vice president of finance for the Integrated Gas unit.
Prior to joining Shell, she worked Citibank, now part of Citigroup Inc., in commercial and real estate finance. Uhl then moved to Enron Corp. where she was involved in the development and acquisition of energy infrastructure including gas pipelines and liquefaction plants, and power assets, according to a profile on Rice University’s website. She began her Shell career as a finance manager for the company’s solar business based in Amsterdam.
One of her many challenges will be to fulfill Shell’s plan to sell $30 billion of assets by 2018. The oil-industry downturn has made this sale difficult, prompting credit-rating companies to warn that the company’s record debt won’t start shrinking soon enough. Shell’s rating was reduced one level by Standard & Poor’s, Moody’s Investors Service Inc. and Fitch Ratings Ltd. this year.
Shell’s cost savings, lower spending and higher production from BG’s assets have started to boost key measures of the company’s financial strength in other ways. Cash flow from operations surged to $8.5 billion in the three months ended Sept. 30, more than triple the second-quarter figure. Though it still isn’t able to cover all expenses without borrowing money, Fitch expects that situation to improve next year.
Oil’s recent surge past $50 a barrel will only help the company, although the outlook for the industry remains uncertain. Henry took over as Shell’s CFO in May 2009 as oil prices were recovering from below $40 during the global financial crisis, saw them surge to more than $100 by the middle of 2014, then collapse again because of an oversupply. Global oil demand could peak in as little as five years, he told analysts on a conference call in November.