Shell struggles in Q3 amid ‘volatile’ energy markets

AFP

LONDON

ENERGY giant Royal Dutch Shell reported on Thursday a 2 percent rise in net profit to $7.139 billion (5.514 billion euros) in the third quarter, saying it had faced “volatile energy markets”.

Shell added in a results statement that adjusted net profit, a key measure stripping out changes in the value of inventories and other nonoperating items, fell by 6 percent to $6.56 billion in the three months to September from the equivalent figure last year.

However, that beat market expectations for profit of $6.31 billion, according to analysts polled by Dow Jones Newswires.

Group revenues meanwhile declined by 8.4 percent to $115.43 billion in the reporting period.

“Shell is driving a long-term and consistent strategy, against a backdrop of volatile energy markets,” said Chief Executive Peter Voser in the earnings release.

“Our earnings were driven by lower oil and gas prices, and lower chemicals margins, which offset the benefits of our operating performance, underlying growth in oil and gas production, and higher results in integrated gas and oil products.” He added: “I am pleased with our progress in a difficult industry environment.” Total production fell by 1 percent to 2.982 million barrels of oil equivalent per day in the third quarter.

But stripping out the impact of asset sales, security problems in Nigeria and other oneoff factors, underlying production was 1 percent higher.

Shell’s net profit figure included the impact of a $1.01-billion gain on the value of inventories and a $432-million impairment, mainly on natural gas assets in the United States and tax changes in Britain.

In response to Thursday’s results, Shell’s ‘A’ share price gained 0.71 percent to 2,140 pence in morning deals on London’s FTSE 100 index of leading companies, which was 0.16 percent higher at 5,791.72 points.

“Shell is continuing to generate substantial cash flows and we expect the priority to be re-investment but the company could afford a more generous dividend if it chose to,” said Investec analyst Stuart Joyner.

Earlier this week, rival energy group BP had revealed on Tuesday that net profits jumped 7.7 percent to $5.43 billion in the third quarter, as it was boosted by a strong performance in its downstream business.

French oil group Total on Wednesday reported a 7.0- percent fall in net third-quarter profit, but its key adjusted figure excluding changes in inventory values soared by 20.0 percent to 3.348 billion euros ($4.4 billion).