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Shell Q1 profit tumbles 58% on lower oil price

Shell Q1 profit tumbles 58% on lower oil price
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First Published: Wed, Apr 29 2009. 12 24 PM IST
Updated: Wed, Apr 29 2009. 12 24 PM IST
London: Royal Dutch Shell Plc followed an oil industry trend of reporting sharply lower first-quarter profit due to lower crude prices, while outperforming analysts’ forecasts.
Shell said its current cost of supply (CCS) net income, which strips out unrealized profits or losses related to changes in the value of inventories, fell 58% compared to the same period in 2008, to $3.30 billion.
Europe’s largest oil company by market value said production of oil and gas fell 3.6% to average 3.40 million barrels of oil equivalent per day in the quarter, as new field startups failed to match natural field declines.
Brent crude averaged around $44 per barrel in the quarter compared to $97 a year ago, hitting earnings at the core upstream oil and gas production unit.
Most other areas of the Hague-based company’s business also suffered, with big profit drops in oil refining and fuel retailing and a swing to loss in petrochemicals.
The sharpest reversal in percentage terms was in Shell’s oil sands unit, which squeezes crude from bitumen-drenched soil in Alberta, a high-cost activity hit hard by lower oil prices.
This unit swung to a $42 million loss from a profit of $249 million in the first quarter of 2008.
However, echoing the performance of rivals such as BP Plc and ConocoPhillips, Shell said profit from trading oil and gas rose.
Shell said debt levels rose, as cashflow from operations were not sufficient to cover expenses and dividend payments. Gearing tripled to 6.6% but remains low enough not to prompt fears the company may have to cut its dividend.
Excluding one-off gains of $337 million, Shell’s CCS result was $2.96 billion, beating an average forecast of $2.62 billion from a Reuters poll of seven analysts.
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First Published: Wed, Apr 29 2009. 12 24 PM IST