Shell profits slow to a trickle in the third quarter

It's a tough time to be in the oil and gas business. Royal Dutch Shell has reported a fall in profits to $6.1bn (£4.5bn) for the past three months, down from $7.2bn for the same the quarter in 2011.

by Rebecca Burn-Callander
Last Updated: 19 Aug 2013
Shell, the second largest oil company in the world, has pinned the blame for its less-than-stellar earnings on lower crude oil prices and stalling output growth. Gas output was down 4% across the third quarter while security breaches in Nigeria stalled operations in the region, dragging Shell’s global liquids production down by 5%. Oil extraction: it’s not for the faint-hearted.
Over the last three months, sales have fallen 8.9% to $112bn. And despite Shell strengthening margins in the oil refining division, it was not enough to counteract the dwindling demand for crude oil. Nevertheless, chief executive Peter Voser insists that Shell has shown ‘progress in a difficult industry environment’.
Current cost of supply profits stand at $6.1bn for the quarter, but stripping out charges for Shell’s asset writedown for weak US gas prices, changes to its UK tax bill, and a few other exceptionals, profits are down just 6% on 2011 to $6.6bn. Not bad, considering analysts had predicted profits in the region of $6.3bn.
Overall, Shell has only managed to grow oil and gas output by 1%. But at least CEO Voser is not alone in facing a Sisyphean task in this current climate: all the other industry players are in the same boat. Earlier this week, BP announced that its replacement cost profit, which strips out the effect of oil price movements, has fallen over the last three months to $4.69bn (£3bn), down from $5.27bn for the same period last year.
Unlike BP, however, Shell has not upped its dividend. It paid out 0.43 cents for the third quarter, unchanged from Q2 and up a lowly 0.01 cents from the previous year.

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