26th Apr 2018 08:07
LONDON (Alliance News) - Oil major Royal Dutch Shell PLC on Thursday reported strong growth in earnings for its quarter on the back of higher prices as well as a "very good" performance in its Integrated Gas business.
Shares in Shell 'A' shares were down 2.0% early Thursday, while 'B' shares were also 2.0% lower.
Current cost of supply, or CCS, earnings excluding items increased 41% year-on-year for the three months to March to USD5.44 billion. CCS earnings attributable to shareholders excluding items rose 42% to USD5.32 billion, while including items it rose 69% to USD5.70 billion.
These items, Shell said, include things such as impairments, divestment gains and losses, and the impact of exchange rate movements, amongst others.
Total first-quarter production available for sale rose 2% to 3.84 million barrels from 3.75 million a year before, and from 3.76 million in the final quarter of 2017.
Total revenue for the period climbed to GBP91.11 billion from GBP73.31 billion, while pretax profit more than doubled to USD8.37 billion from USD3.37 billion.
Shell - London's largest company by market capitalisation - is to pay a first quarter dividend of 47 US cents per share, flat year-on-year.
The company said the "strong" performance was driven by higher oil and gas prices, as well as the continued good performance of its Integrated Gas Business and higher profit from Upstream operations, though the Downstream business did post lower earnings.
Brent oil was quoted at USD74.27 a barrel early Thursday, trading around its best levels since late 2014.
Integrated Gas earnings excluding items more than doubled for the quarter to USD2.44 billion from USD1.18 billion, with total production for sale increasing 31% to 972,000 barrels of oil equivalent a day.
Production for its second quarter is expected to be some 140,000 to 160,000 barrels of oil equivalent a day higher than the prior year.
Upstream earnings excluding items in the first quarter nearly tripled to USD1.55 billion from USD540.0 million, but production for sale did fall 5% year-on-year to 2.87 million barrels of oil equivalent a day. Shell said higher oil and gas prices boosted earnings despite volume decline.
Upstream production in the second quarter is expected to fall between 230,000 to 260,000 barrels of oil equivalent a day year-on-year due to maintenance and field declines, amongst other things.
Shell's Downstream business earnings excluding items fell 32%, however, to USD1.69 billion. Oil products sales volumes were up 4% year-on-year to 6.79 million barrels a day but chemical sales volumes fell 1% to 4.51 million tonnes.
The dip in earnings, Shell said, was due to lower trading contributions, unfavourable foreign currency movements, and a general weakening in the condition of the refining industry.
Higher maintenance is likewise expected to decrease refinery availability in the second quarter, though chemicals and oil products sales are expected to increase.
Chief Executive Ben van Beurden said: "Shell's strong earnings this quarter were underpinned by higher oil and gas prices, the continued growth and very good performance of our Integrated Gas business, and improved profitability in our Upstream business.
"Less favourable refining market conditions and lower contributions from trading impacted the earnings of our Downstream business."
He added: "We have a strong financial framework. Our commitment to capital discipline is unchanged, we are making good progress with our USD30 billion divestment programme and our outlook for free cash flow – which covered our cash dividend and interest this quarter and over the last year – is consistent with our intent to buy back at least USD25 billion of our shares over the period 2018-2020."
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