Salient to Investors:

Royal Dutch Shell’s surprise Q4 earnings decline to the lowest since 2009 shows the rising cost of developing new fields has cut into profit. Brent oil prices have spent 3 straight years above $100 a barrel, but getting crude out of the ground is only getting more expensive. 

Shell’s cost of finding and developing oil fields has tripled from 2003 to 2012, in line with the 12 largest European oil producers.

Iain Armstrong at Brewin Dolphin said higher finding costs and significant increases in expenditure over the past 4 to 5 years means the sector has to worry that recent levels of dividend growth won’t be sustainable.

Brent oil more than doubled to $105 a barrel since the start of 2009, but the top 5 oil and gas companies have gained just 16 percent since then versus an 87 percent increase in the DJIA.

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