Shell quarterly earnings beat analysts’ projection
31 Jul 2014
Royal Dutch Shell Plc posted a 33-per cent rise in quarterly earnings today, beating analysts' forecasts even with impairments of almost $2 billion after higher production and selling prices, Reuters reported.
The Anglo-Dutch oil company also hiked its quarterly dividend and said the value of its share buybacks and dividends for 2014 and 2015 would cross $30 billion. The stock was up 3 per cent in early trade.
Shell's second-quarter earnings on a current cost of supplies basis excluding one-time items stood at $6.1 billion, which was 33 per cent up from a year earlier. Analysts had expected earnings at $5.46 billion.
Reuters quoted Jason Kenney, analyst at Santander, referring to Shell's two largest divisions as saying the upstream numbers were better than expected, though downstream was still weak.
Across the business there were some very material write-downs and there might be even more coming, he added. Kenney, has a "hold" rating on Shell's shares.
A net charge of $1 billion after tax with impairments of $1.943 billion related mainly to gas assets in the US was included in the quarter's earnings.
''The impairments we have announced today in Upstream Americas reflect the restructuring of Shell's resources plays portfolio,'' chief executive officer Ben van Beurden said in the statement. ''We are taking firm actions to improve Shell's capital efficiency by selling selected assets and making tougher project decisions.''
Van Beurden, who took over as CEO from Peter Voser at the start of the year, was accelerating asset disposals and reviewing spending plans in a bid to gain support from investors, Bloomberg reported. He had been able to steer the company back to profit in the Americas this year.
The US gas charge was partly offset by Shell's disposal of stakes in Australia's Woodside Petroleum Ltd and Wheatstone liquefied natural project. According to Shell spokesman Jonathan French, the company made a $570-million profit in producing projects in the Americas in the second quarter excluding the impairments, Bloomberg reported.
The second quarter last year saw the company write off $2.1 billion in ''liquids-rich shales properties in North America''.
US natural gas prices were up 14 per cent and oil rose 9.4 per cent in the second quarter from last year as demand increased for fuels.
