We add RDShell to the Conviction Buy List and remove Total
Shell has the joint highest 2016E dividend yield in the sector (with BP), and we believe this will be driven lower as cash coverage of the dividend grows substantially over the coming 12 months due to cost cutting, greater capital discipline, the realization of synergies, disposals and a rising oil price. Total remains Buy rated but comes off the Conviction List as we see greater upside potential in RDShell. Statoil remains CL-Sell; we see more challenged FCF dynamics and risks related to European gas prices.