Shell’s third-quarter earnings jump 47%

Nov. 2, 2017
Royal Dutch Shell PLC posted a third-quarter net profit attributable to shareholders on a current cost of supplies basis of $4.1 billion, up from $2.7 billion in third-quarter 2016.

Royal Dutch Shell PLC posted a third-quarter net profit attributable to shareholders on a current cost of supplies basis of $4.1 billion, up from $2.7 billion in third-quarter 2016.

The increase reflected stronger refining and chemicals industry conditions, increased realized oil and gas prices, and higher production from new fields, offsetting the impact of field declines and divestments, the major said.

Shell’s cash flow from operations for the third quarter was $7.6 billion, including negative working capital movements of $2.5 billion mainly due to increases in inventory value and current receivables, compared with favorable working capital movements of $700 million in third-quarter 2016. Excluding working capital effects, cash flow from operations was $10.1 billion.

The major’s downstream business recorded earnings of $2.7 billion, up from $2.1 billion a year earlier. Integrated gas earned $1.3 billion, up from $931 million in third-quarter 2016. Shell’s upstream segment earned $562 million, up from just $4 million a year earlier.

“Upstream generated almost half of the $10-billion cash flow from operations excluding working capital this quarter at an average Brent oil price of $52/bbl, and this was complemented by good cash contributions from our growing integrated gas business and from downstream,” said Ben van Beurden, Shell chief executive officer.

Shell’s third-quarter production averaged 2.7 million boe/d, which was 1% lower compared with the same quarter a year ago. New field start-ups and the continuing ramp-up of existing fields—in particular, Lula, Iracema, and Sapinhoa in Brazil’s Santos basin, Kashagan in Kazakhstan, as well as Stones, Olympus, and Mars in the US Gulf of Mexico—contributed 243,000 boe/d to production compared with the third quarter 2016. This offset the impact of field declines and divestments.

Shell expects its fourth-quarter upstream earnings to be negatively impacted compared with a year earlier by a reduction of 250,000 boe/d due to completed divestments and 40,000 boe/d due to higher maintenance activities.

Lower production in NAM in the Netherlands and an improved security situation in Nigeria—although the situation remains sensitive—are expected to be largely offsetting, Shell said.

Compared with fourth-quarter 2016, Shell expects its integrated gas production will be positively impacted by 90,000 boe/d mainly associated with Gorgon LNG in Australia and portfolio impacts.

The major’s refinery availability is expected to increase in the fourth quarter because of lower levels of maintenance compared with the same period a year ago, while chemicals manufacturing plant availability is expected to increase in the quarter, reflecting improved operational performance at its Bukom site in Singapore and lower maintenance compared with fourth-quarter 2016.