Thu 30th Apr '15
Shell has defied City forecasts by posting a smaller than expected drop in first-quarter profits as the collapse in the oil price continues to weigh on energy companies.
The oil major said earnings excluding exceptionals were $3.2bn in the first three months of 2014, down 56pc on the $7.3bn made in the same period last year. The City had been expecting a drop to about $2.5bn.
The FTSE 100 energy giant has been hit hard by the falling oil price, which at around $65 a barrel is about half the price it was a year ago.
Despite this, the company said profits from refining and trading climbed to $2.65bn from $1.6bn last year, helping counter the fall in earnings from oil and gas production, which dropped from $5.7bn a year ago to just $675m.
Ben van Beurden, chief executive, said: "Our results reflect the strength of our integrated business activities, against a backdrop of lower oil prices. Meanwhile, 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."
He added that Shell has sold $2bn of assets this year.
Despite the drop in profits, Shell said it would go ahead with its plan to dramatically expand via its £47bn takeover of BG Group. The move, the biggest oil deal in UK corporate history, has sparked speculation that there could be a new wave of consolidation among the world’s major oil companies.
Mr van Buerden added: "Looking ahead, the proposed combination with BG, which we announced in April, would create a stronger company for both sets of shareholders. The combination with BG would accelerate Shell's growth strategy in deep water and liquified natural gas, and create a springboard for further optimisation of our asset base, particularly when evaluating the longer-term portfolio."
Prior to revealing the BG bid, Shell in January slashed investment in new projects by $15bn over the next three years. Casualties of the cuts included the “commercially unfeasible” $6.5bn Al-Karaana project in Qatar.