Profit fall offset by key strengths
Shell chief warns against ‘over-reacting’ to oil price fall
Royal Dutch Shell saw unadjusted profits slide 56% in the first quarter to $3.2 billion (£2bn), but they were better than expected as refining and trading profits offset a decline in earnings from oil and gas.
The company is maintaining its dividend of 47 cents per share and will be scaling back its investment programme.
Chief executive Ben van Beurden said the rise in profits from refining and trading rose sharply from $1.6bn to $2.65bn reflected the strength of the business against a backdrop of lower oil price.
Oil and gas production in the first quarter was 2% lower than last year at 3.17m barrels of oil per day.
But Mr van Beurden warned against over reacting to the recent oil price fall. Oil majors have slashed 2015 upstream budgets by 10 to 15% on average in recent months.
BP and Total kicked off the sector’s quarterly results season on Tuesday with higher than expected profits thanks to steep increases in profits from refining, showing the resilience of global oil firms in the face of slumping oil prices.
Benchmark Brent prices averaged $55 a barrel in the first quarter of 2015, almost half the level of a year ago.
“In what is clearly a difficult industry environment, we continue to take steps to further improve competitive performance by redoubling our efforts to drive a sharper focus on the bottom line in Shell,” said Mr van Beurden.
He said that the tie-up with BG would create a “stronger company” for both sets of shareholders.
“The combination with BG would accelerate Shell’s growth strategy in deep water and LNG, and create a springboard for further optimisation of our asset base, particularly when evaluating the longer-term portfolio,” van Beurden said.