Profits at Anglo-Dutch oil giant Shell rose 18% in its third quarter results, announced today. But – like rival BP – it is keeping a tight lid on investment with spending at the bottom of the expected range as it too grapples with persistently weak crude oil prices.
But Shell also said its planned capital spending for 2017 is expected to be at around $25 billion at the bottom of the range previously given.
This year’s capex will be around $29 billion, down from a combined $36 billion for Shell and BG Group in 2015.
Net income in the quarter, based on a current cost of supplies (CCS) and excluding exceptional items, rose to $2.8 billion, beating analysts’ expectations of $1.71 billion.
Chief Executive Ben van Beurden commented: “Lower oil prices continue to be a significant challenge across the business and the outlook remains uncertain.
“Our investment plans and portfolio actions are focused firmly on reshaping Shell into a world-class investment case at all points in the oil-price cycle, through stronger returns and improved free cash flow per share. We are making good progress towards this aim despite current challenging market conditions.
“The integration of Shell and BG is now essentially done and has been completed well ahead of plan. It’s been an important catalyst for the significant and lasting changes we are making to the company’s working practices, cost structure and portfolio.
“In parallel with the integration, we have been managing the company through the down-cycle by reducing costs and investment levels, while executing our asset sales plans and starting up new projects.
“Our underlying operational costs in 2016 are already at an annualised run rate of $40 billion, $9 billion lower than Shell and BG costs in 2014. They’re set to reduce further on a like-for-like basis as deal synergies and improvements are delivered in full.”