Shell reports first-quarter earnings of $2.23 billion

May 15, 2017
Royal Dutch Shell PLC reported first-quarter earnings on a current cost of supply basis, excluding identified items, of $3.86 billion, up $2.23 billion from first-quarter 2016.

Royal Dutch Shell PLC reported first-quarter earnings on a current cost of supply basis, excluding identified items, of $3.86 billion, up $2.23 billion from first-quarter 2016. The Anglo-Dutch firm says the big increase is mainly driven by higher contributions from its upstream and chemicals business, partly offset by higher net interest expense.

Cash flow from operating activities at Shell for the first quarter was $9.5 billion, including negative working capital movements of $1.8 billion; compared with $700 million in first-quarter 2016, including negative working capital movements of $3.9 billion.

"We continue to reshape Shell's portfolio and to transform the company with over $20 billion divestments completed or announced that will strengthen the balance sheet as they are completed," commented Shell Chief Executive Officer Ben van Beurden.

"Following the successful integration of BG, we are rapidly transforming Shell through the consistent and disciplined execution of our strategy," he said. "This includes investing around $25 billion this year and the delivery of new projects, which we expect to generate $10 billion in cash flow from operating activities by 2018."

Shell's upstream CCS earnings excluding identified items were $540 million, up from a loss of $1.44 billion in first-quarter 2016. Earnings benefited from higher realized oil and gas prices, increased production volumes mainly from new assets and improved operational performance, and lower depreciation including the impact of assets held for sale.

The production contribution of BG assets for an additional month, compared with first-quarter 2016, was 211,000 boe/d. New field startups and the continuing ramp-up of existing fields-in particular Lula Central, Lula Alto, and Lapa in Brazil, Kashagan in Kazakhstan, Sabah Gas Kebabangan in Malaysia, and Stones in the Gulf of Mexico-contributed 142,000 boe/d to production compared with first-quarter 2016, which more than offset the impact of field declines.

The firm's downstream earnings totaled $2.49 billion, up year-over-year from $2.01 billion. Chemicals sales volumes benefited from improved operational performance and improved demand driven by tight supply conditions in the Americas.

Shell's integrated gas business's earnings were $1.181 billion, up from $994 million in first-quarter 2016. Earnings benefited from higher realized oil, gas, and LNG prices, higher LNG volumes, and increased contributions from trading. This more than offset the impacts of lower liquids production volumes, the accounting reclassification of Woodside Petroleum Ltd. in second-quarter 2016, and higher taxation .