It was a case of swings and roundabouts in Shell’s first-quarter results announced today – increased profits on downstream-refinining activities helped offset lower profits arising from depressed crude oil prices.
Underlying first-quarter profits fell 56% from a year earlier to £2.1 billion ($3.2bn) – analysts had expected profits of about $2.5bn.
Shell said it had sold $2bn of assets so far this year. Including the proceeds of asset sales, Shell’s first-quarter profits rose 7% to $4.76bn.
Kim Fustier, oil analyst at Edison Investment Research, commented: “Shell beat consensus expectations by ~30% in 1Q thanks to a blowout quarter in refining and marketing, where BP and Total also beat on Tuesday.
“Its downstream division posted the best quarterly earnings since the ‘golden age of refining’ in 2006-07. R&M profits were buoyed by strong global refining margins, cost savings initiatives and a healthy contribution from trading.
“Shell’s upstream performance was far less stellar, due to lower oil and gas prices and foreign exchange movements. Upstream Americas made its biggest quarterly loss in at least a decade.”
Ben van Beurden, Chief Executive, Shell, explained: “Our results reflect the strength of our integrated business activities, against a backdrop of lower oil prices.
“Meanwhile, in what is clearly a difficult industry environment, we continue to take steps to further improve competitive performance by redoubling our efforts to drive a sharper focus on the bottom line in Shell.
“Part of this sharper focus is the sale of non-strategic assets. Asset sales total over $2 billion so far this year, as we successfully reduced our onshore footprint in Nigeria.
“In parallel we continue to reduce our operating costs and capital spending; and by deferring and reshaping new projects, we can achieve further efficiencies and savings in the global supply chain.
“Looking ahead, our £47 billion merger with BG – which we announced earlier this month – will create a stronger company for both sets of shareholders.”