Shell posts quarter-over-quarter decline in adjusted net income
Royal Dutch Shell PLC reported fourth-quarter earnings on a current cost of supplies basis, excluding identified items, of $2.9 billion, a decrease from the $4.8 billion reported in the year’s third quarter and 49% lower than the $5.7 billion recorded in fourth-quarter 2018.
The decrease, excluding identified items at $2.9 billion, reflected lower realized oil, gas, and LNG prices, weaker realized refining and chemicals margins, as well as negative movements in deferred tax positions compared with the fourth quarter 2018. This was partly offset by stronger contributions from LNG trading and optimization. Following its annual balance sheet review, identified items reflect the impact from impairments in the quarter of $2.2 billion, mainly associated with US natural gas assets.
Integrated gas earnings were $2 billion, down $400 million, reflecting lower realized LNG, oil and gas prices, higher depreciation with several projects ramping-up, partly offset by stronger contributions from LNG, gas and power trading and optimization.
In upstream, earnings were some $800 million, reflecting deferred tax charges, higher charges for provisions related to restoration and decommissioning obligations, lower oil and gas prices, and increased well write-offs.
Cash flow from operations, excluding working capital movements, was $12.3 billion, some $600 million lower than fourth-quarter 2018. In the integrated gas business, cash flow from operations in this year’s fourth quarter was $3.5 billion, some $2.3 billion lower than the year-ago quarter. In the upstream segment, cash flow from operations was $4.2 billion, around $2.7 billion lower than in the same quarter a year ago. In the downstream business, cash flow from operations was $2.3 billion, some $6.5 billion lower than in fourth-quarter 2018.
“The strength of Shell’s strategy and portfolio has enabled delivery of competitive cash flow performance in 2019 despite challenging macroeconomic conditions in refining and chemicals, as well as lower oil and gas prices,” said Ben van Beurden, Royal Dutch Shell chief executive officer. “We generated $47 billion in cash flow from operating activities excluding working capital movements and distributed over $25 billion in dividends and share buybacks to our shareholders.”
“We remain committed to prudent capital discipline supported by world-class project delivery and are looking to further strengthen our balance sheet while we continue with share buybacks” he said. “Our intention to complete the $25 billion share buyback program is unchanged, but the pace remains subject to macro conditions and further debt reduction.”